Brand & relationship equity - Customer Equity
4 important questions on Brand & relationship equity - Customer Equity
How does the customer life time value formula look like?
- Acquisition cost
- cash flow generated by customer in period
- Retention cost for customer in period
- customer i's retention rate in period t
What are the two methods of measuring CLV?
- Bottom-up
- Top-down
What are the three characteristics of bottom-up measure of CLV?
- Customer level data
- Summing up to segment or company-level outcomes
- More data requirements
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What are the three characteristics of top-down measurement of CLV?
- Segment or firm-level data
- Calculate average CLV per customer
- Multiply by expected customers
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