Contemporary Analysis

Data Science

Grant Stanley

Why Customer Segmentation Analysis is Essential

Customer segmentation analysis is essential. No company has just one type of customer. Customer segmentation analysis allows you and your data to capture this reality. Capturing reality is a pre-requisite to using data to make decisions. Each customer segment needs to be understood, marketed to, and tracked.  Download our case study. 

It is time to stop thinking about your "customer" and start thinking about your "customers". Don't let your marketing and customer metrics, hide valuable facts and insight in aggregated data and averages. The next level of marketing analytics is to calculate and track metrics for each customer segment. Customer segmentation provides you a window through which to understand why people do what they do. This gives you enormous power when trying to improve customer lifetime value, increase customer loyalty, reduce the cost of customer acquisition.

Grant Stanley

How to Calculate Customer Lifetime Value and Cost of Customer Acquisition

While it is important to focus on new client acquisition, it is equally and perhaps more important to focus on improving your relationships with your current customers. This will help you improve your customer lifetime value. Customer lifetime value is the amount of net profit you receive from each customer. As a general rule, the average customer lifetime value needs to be 3 to 5 times the average cost to acquire a customer.

Improving customer lifetime value will help you have a sustainable and profitable business. To stay in business, the net profit from each customer has to be more than the cost to acquire each customer.

Customer Lifetime Value is the average net profit that can be attributed to a company's entire relationship with a customer.

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