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Measuring Customer Lifetime Value Keeps Companies On Track For Success In The Digital Economy

  • Avaya and Frost & Sullivan release new research that shows the impact of Customer Lifetime Value on long-term profitability and growth
  • Research shows high performing, strategic CLV companies make the contact center the focal point of delivering a seamless, omni-channel experience
  • New Customer Lifetime Value calculator tool helps companies overcome the challenges of measurement and gain a more accurate picture

Avaya, a global leader in business communications software, systems and services, has released new research and calculator tool avaya logodeveloped with industry analysts, Frost & Sullivan that helps companies determine how they are executing against a top priority for digital transformation efforts: Improving Customer Engagement.[i] The research into Customer Lifetime Value (CLV) identifies qualities that separate high-performing companies from others, and how customer engagement can be influenced through a blend of business orientation, resource management and technology.

With investments in digital transformation initiatives outweighing overall IT spend in some industries,[ii] it’s critical that companies have a means of determining if the investments are having the intended effect on key objectives. Unilaterally, 80% of companies in any stage of digital transformation cite improving customer engagement as a priority.[iii] Measuring Customer Lifetime Value (CLV) can help companies stay on track for success since the research shows that companies tracking CLV significantly outperform others in terms of profitability and growth.

Customer Lifetime Value is the present value of all the future cash flows attributed to a customer relationship. It includes the projected amount of money the customer may spend and such items as the cost of new customer acquisition or savings from customer retention, the propensity of a customer to refer the company to others and the cost of their loyalty. Against digital transformation initiatives, measuring CLV helps companies see how see that all decisions and actions are tied together and encourages a long-term look at the customer relationship rather than short-term quarterly impacts.

Measuring CLV is a challenge for many, however, and those that do often question whether they are getting an accurate picture. Among the challenges cited are: understanding what to track, incomplete data, onerous efforts needed for tracking, disjointed systems. The CLV calculator helps companies work through the areas and questions that can help them better understand what and how to measure.

The research also uncovered how and where CLV can be influenced. Successful CLV businesses placed the highest priority on the customer experience and brand and saw the contact center as the epicenter of managing the customer experience and responsible for ensuring long-term loyalty. Customer Experience Management drives higher Customer Engagement and Customer Lifetime Value because it helps improve customer satisfaction for better revenue potential, brand advocacy and longevity of relationship while reducing customer acquisition and support costs. Contact Centers and the technology supporting them are essential to success by enabling three criteria to optimal CLV as indicated by the research: an omni-channel customer experience; backed by enterprise-wide team engagement and access to actionable insight at all appropriate levels.

Avaya Customer Engagement Solutions and Avaya Professional Services enable companies to optimize the customer experience through a full portfolio of contact center technologies and consulting services.

“Improving customer engagement needs to be a thread woven throughout an organization. Customer Lifetime Value reflects how well that’s understood and if the right steps are being taken. The growing investments in digital transformation strategies make it even more critical for companies to quantify the outcome of their efforts to determine if they’re on track for success. ”
Laurent Philonenko, SVP and CTO, Avaya

“Companies today need to keep pace with a new kind of consumer, and that has everything to do with digital transformation. Generation Y is leading the way toward a digital world and a new way of spending; the rise of new channels includes everything from social, mobile, and video to automated, self-service

solutions. For businesses, embracing this concept of CLV suggests that all organizational decisions and actions are consequential when it comes to the customer — and it’s notable that ‘High-performance CLV Users’ have

less multi-channel capability as well as contact optimization capability. But the challenge many organizations have is actually quantifying the value of customer engagement and then determining

the optimal mix of strategy, people, processes, culture, and technology in order to ensure that maximum Customer Lifetime Value.”

Stephen Loynd, Global Program Director, Frost & Sullivan
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