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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