CLV is an important framework for business decision making. It provides a customer selection and resource allocation strategy that considers the entire customer lifecycle. The CLV framework consists of four steps:
- Customer Selection - Identify customers who are likely to be profitable over the long term.
- Customer Segmentation - Analyze customer segments and create sub-segments that are likely to have similar profitability characteristics.
- Resource Allocation Strategy - Determine which resources to allocate based on the customer segment and its profitability potential.
- Tracking Progress and Monitoring Performance - Track progress with respect to customer segments goals, and monitor performance of each segment against their targets