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For companies looking to improve retention rates, customer lifetime value (CLV) is a crucial concept, but one which companies find hard to measure.
Econsultancy's new Building Loyalty and Driving Revenue in the Digital Age report looks at this issue in more detail.
Having surveyed almost 900 agency and company respondents, we found that, though the vast majority agreed that CLV was an important concept, just 42% said they were able to measure it.
Here's a sneak preview of some of the findings of the report produced in partnership with Sitecore.
The vast majority of companies (89%) see customer experience as a key factor in driving customer loyalty and retention, while 76% see CLV as an important concept for their organisation.
Of the 42% that said they were able to measure customer lifetime value, 11% of companies 'strongly' agreed they could measure it and a further 31% 'somewhat' agreed.
The Customer Lifetime Value report is based on a survey of marketers and interviews with senior executives from a range of businesses, including British Airways, Aviva, Santander and Merlin Entertainment.
One of the challenges is that many organisations simply aren’t set up to manage lifetime value, with 35% of respondents saying that the siloed nature of their organisations and lack of coherent marketing hinders their ability to increase CLV.
A third (34%) of companies felt that poor systems or lack of integration hindering customer experience was one of the most significant factors negatively impacting their ability to build CLV.
Of course, companies in different sectors face distinct challenges as they attempt to build customer loyalty.
Business respondents in the education, manufacturing and charities / non-profit sectors are most likely to see their customers as loyal.
Utilities and healthcare / pharma respondents see their customers as least loyal.
Companies in the travel & leisure, consumer goods and utilities sectors are most likely to say their customers find it ‘very easy to switch’.
Though 44% of automotive brands believe their customers find it ‘quite’ or ‘very’ easy to switch, only 11% felt customers had the potential to be disloyal, with most remaining neutral or saying customers are ‘quite loyal’ (44% each).
Retail respondents considered their customers to be neither especially loyal or disloyal, despite the relative ease with which they can move to a competitor.
According to Shawn Cabral, Marketing Director for Sitecore UK:
This report shows that brands recognise the importance of delivering a great customer experience, but what needs to change is for brands to re-define the meaning of customer experience, to embrace every interaction with their brand.
It is not just about technology, but also being able to be ‘multichannel’ within an organisation. Can all the internal departments ensure that they use their data and customer insight to collect, connect and predict, so they deliver an exceptional customer experience?