The power of Customer Lifetime Value (CLV) is that it clarifies key strategic considerations for our clients. At Mather, we have developed a CLV analysis that can accurately predict changes in retention due to certain events such as: transition to EZ pay, promotions, upgrades and price changes. Using our econometric model, CLV allows our clients to conduct certain Marketing analyses with increased rigor. How the model is built – and implemented – is crucial to making CLV scores actionable and statistically significant.
The CLV metric allows you to allocate acquisition and retention resources to their most profitable use through rigorous fact-based analysis. CLV is the risk-adjusted operating margin for an individual customer within 36 months of acquisition.
CLV = [(Circ Rev + PP rev – Del Cost – Prod Cost)*(Expected Lifetime)] PV – Acquisition Cos
Once the source data is identified and available in a central location, the CLV model can be implemented in a scientific way
Our strategic pricing analysis and actions provide many of the components of CLV. Retention has been modeled using survival analysis and A/B testing has validated price elasticity for customer segments.
Quantified variances in price elasticity by income, age, service. In addition, direct costs and preprint revenues by customer are integrated with retention analysis. Finally, targeted upgrades use analytics to increase circulation and revenue by account, which will improve CLV for those customers.