Dashboards Don’t Drive Growth. Customer Insights Do.
Data is one of the most misused components of sales and marketing because in many cases, the dashboards, visualizations, and tools have become more tantalizing to the end-user than the insights themselves.
It’s like someone bragging about their paintbrush, but all they’ve painted is a stick figure.
Fancy paintbrushes (data) don’t make a masterpiece – what you do with them does (insights)!
Dashboards are cool, but do you know your customers?
Most businesses have a wealth of data at their disposal. The problem is that we rush to build those fancy dashboards without first diving into who is bringing us revenue and why.
The best advice I have is to get to know your customers.
Let me say that again… KNOW YOUR CUSTOMERS!
And the first KPI to uncover is Customer Lifetime Value (CLTV).
CLTV is widely regarded as the most important metric for businesses because it quantifies the long-term value each customer contributes to the company. Unlike other metrics (i.e. new deals booked) that focus on short-term gains, CLTV provides a comprehensive view of customer profitability over their entire relationship.
Customer lifetime value reveals the average value of a customer to your business over the duration of the relationship.
Customer value is the average purchase cost and frequency of their purchases, whereas the average customer lifespan indicates the typical duration a customer remains active, divided by the total customer count.
Sounds complicated?
Here’s an example.
Unlock customer insights
The CLTV formula serves as valuable insights for you to strategically plan to acquire and retain customers. By getting to know your customers, you will be able to uncover unique characteristics of who they are and match to highly sought after prospects.
Marketers should leverage this information with:
- Targeted marketing
- Customer Segmentation
- Resource Allocation
- Product and service offerings
- Customer experience
The shift to long-term profitability will help a business prioritize efforts to attract and retain your most valuable customers. This helps maximize returns on marketing investments and ensures you’re not just chasing one-time buyers.
The CLTV analysis also helps create better retention strategies because as we all know, it’s far more cost-effective to keep a loyal customer than to constantly acquire new ones.
Turn Insights into action
Don’t let the allure of being (data) smart inhibit your ability to think rationally and strategically.
Use data to your advantage. Start with customer lifetime value, expand your analysis, and be quick and flexible in making decisions.