{"id":1899,"date":"2022-04-11T11:12:02","date_gmt":"2022-04-11T04:12:02","guid":{"rendered":"https:\/\/mintea.blog\/?p=1899"},"modified":"2022-04-11T11:12:27","modified_gmt":"2022-04-11T04:12:27","slug":"1899","status":"publish","type":"post","link":"https:\/\/mintea.blog\/?p=1899","title":{"rendered":"Increasing Customer Revenue Over Time"},"content":{"rendered":"

Increasing Customer Revenue Over Time<\/strong><\/p>\n

One of the key goals of measuring customer lifetime value is to track the average value over time and to look for positive and cost-effective increases. A key component in increasing customer lifetime value is to increase customer revenues through gaining increase in \u201cshare of customer\u201d.<\/p>\n

An increase share of customer will happen naturally over time as the consumer becomes more comfortable with a brand\/firm and looks to extend their purchases with a brand\/firm that they know and trust. Marketers will also try to deliberately increase revenue from existing customers through various marketing tactics and offers.<\/p>\n

There are two broad ways to achieve this increase share of customer (but a total of\u00a0seven pathways to growing customer revenues<\/a>). The first is to sell a greater quantity of products to the consumer. If we use McDonald\u2019s as an example, they could increase customer revenue if the average customer also bought coffee at McDonald\u2019s once a week in addition to their weekly visit for a burger. In this case, they have effectively increased customer revenue through the sale of more products.<\/p>\n

This is a common tactic in the banking sector, where the metric of products per customer is an important measure of the depth of the customer relationship.<\/p>\n

The other approach to increasing share of customer is to increase the dollar value of what the customer purchases. In the airline industry as an example, if they could persuade more people to fly business class instead of the economy, then they have increased their revenue per customer without increasing the customer\u2019s quantity of purchases.<\/p>\n

Increasing customer profitability over time with CLV<\/strong><\/p>\n

Reichheld\u2019s studies<\/a>, in the 1990s, identified through analysis of several industries that it is common for customer profitability to increase over time. Therefore, it is generally inappropriate to have a flat customer profit per year the year included in your customer lifetime value model.<\/p>\n

Please note that the\u00a0free customer lifetime value Excel template<\/a>\u00a0allows you to enter increasing consumer revenues, and dynamic consumer costs over a ten-year period.<\/p>\n

\"Diagram\n\nDescription
\nAs highlighted in the diagram, customer revenues will increase over time for the following reasons:<\/p>\n