Strategic advantage. Growth. Profitability. Long-term success.
They’re among the most important objectives for business leaders across just about every industry and discipline. Customer lifetime value (CLV) can play a key role in achieving them.
Centricity brings you the CLV-centric content to help make that happen.
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Best Practices for Activating CLV to Be More Customer-Centric
Think you know CLV, its history, the related concepts, models, uses and more? Test – and build – your knowledge with a short quiz each month.
CONCEPT OF THE MONTH
CLV has a language of its own, with numerous words, phrases, acronyms, initialisms, and abbreviations. Learn to speak and understand it one concept at a time. This month’s featured concept:
Buy Till You Die (BTYD)
While the name sounds like a life-threatening shopping obsession, Buy Till You Die (BTYD) is actually a class of statistical models. These models are designed to capture the behavioral characteristics of non-contractual customers until they “die” — or, more accurately, until they become inactive.
BTYD models estimate the purchasing behavior of a customer through two stochastic (having a random probability distribution or pattern that may be analyzed statistically but may not be predicted precisely) processes:
- Repeat purchase, which explains how frequently customers make purchases while they are still “alive”
- Dropout process, which models how likely a customer is to churn in any given time period
Why is this important? The primary purpose of BTYD models is to forecast customer lifetime value (CLV). CLV helps companies identify their highest-value customers, which are those that will spend the most on business or products over their lifetime with a company.
Since customer centricity is largely about retaining and acquiring these high-value customers, understanding BTYD models (at least at a high level) is critical to being a customer-centric company.
UPCOMING CENTRICITY WEBINAR
CLV in Action: You’re Doing Corporate Valuation Wrong!
Join Theta co-founder Dan McCarthy as he talks to Michael Mauboussin, head of Consilient Research at Counterpoint Global, Morgan Stanley Investment Management on Friday, October 6 at 10:30am Eastern Time.
They’ll discuss the pros and cons of CLV analyses — and how private equity companies, corporations, and others can maximize their successes when employing the right customer-based value methodologies and models.
Ready to speak with the Theta team?
Contact us today