Writing Resources
To manage and predict future growth as well as the profitability of a company it must understand its customers and its relationship with them To understand this relationship and to put figures against it different metrics could be used in businesses Companies use the metrics such as customer lifetime value CLV to understand the importance of a certain type of customer towards the business and give a greater insight of the expected future revenue as well as expenses CLV is the expected revenue from a customer over the course of the relationship with the customer and the company Upon the calculation of CLV many different factors need to be taken into consideration Such as contract length how long a customer is with the company revenue per customer cost to acquire the customer also called acquisition cost gross margins etc In addition the calculation of CLV will depend on the business model strategy and other factors used by the company From the above calculations of CLV it pretty evident that the accounting firm's business customers have a higher CLV than individual customers Even though the total spent on marketing campaign is twice than individual customers the return is significant higher than individual customers
