CLV is the most strategically important customer metric most businesses don't calculate. ERP transaction data makes this calculation straightforward.
CLV Formula and Inputs
CLV = (Average purchase value × Purchase frequency) × Customer lifespan, minus acquisition cost. All inputs — purchase value, frequency, and lifespan — come directly from ERP transaction history.
Segmenting Customers by CLV
The top 20% of customers by CLV typically generate 80% of profit. ERP CLV segmentation reveals which customers deserve premium service, retention investment, and proactive relationship management.
Using CLV to Set Acquisition Budgets
If a new customer's average CLV is Rs500K over 5 years, spending Rs50K to acquire them is economically justified. CLV transforms acquisition budgeting from guesswork to investment math.
CLV Improvement Strategies
Increasing purchase frequency, increasing average order value, and extending customer lifespan all improve CLV. ERP analytics identifies which lever is most powerful for each customer segment.
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