Customer lifetime value (CLV) has become an increasingly important metric to measure campaign success beyond return on investment (ROI). In 2019, more marketers (43%) were found to be aware of CLV compared to the previous year (34%).
However, a lack of digital skills, customer data and organisational issues are holding back companies from achieving full implementation of CLV.
That’s according to new research by Criteo, the ad platform, based on the answers of 100 marketing decision makers.
“The adoption of CLV reflects an important shift in the way businesses look at customer relationships, from short-term profits to long-term sustainable relationship. The truth is, for many marketers, ROI is no longer fit for purpose. The study shows that the industry is looking for a more sophisticated metric that gives businesses a deeper understanding of their customer relationships and their value over time,” said Elizabeth Brennan, Criteo Director, Account Strategy & Sales, UK.
CLV provides benefits such as higher customer retention (64%), increased sales (59%), and brand loyalty (58%). And according to Criteo is has already become a key strategy for brands to boost loyalty.
Previous research by Criteo found that 64% of shoppers consider new brands based on whether they provide value for money (63%), product selection (43%), customer service (44%) and low prices (43%).
Breaking down the core challenges marketers face in swapping to CLV, respondents said that data presented a challenge due to issues with tracking customers cross-device (30%), collection of data from users who were not signed in (23%) and inability to track single-use products (21%).
Another 66% of marketers admitted that their organisation could be better at monitoring CLV, but unsophisticated strategy (20%), lack of senior buy-in (20%) and organisational silos (17%) prevented them from doing so.
Furthermore, 40% of respondents said that their organisation lacked the necessary in-house skills to monitor CLV, 27% found it too complicated to monitor and 18% were unable to implement outcomes.
“Marketers, senior management and lines of business heads all have important roles to play in bridging these gaps and making CLV an actionable way to monitor and enhance relationships with existing customers and prospects,” added Brennan. “With deeper understanding and an increased ability to implement, we believe that CLV could replace return on investment (ROI) as the primary measure for the success of customer relationships and a key driver for loyalty in a competitive marketplace.”
The research shows that marketers have not yet fully embraced CLV. With customer loyalty emerging as an important goal of brand success, CLV will likely become an ever more important metric to measure ad success.