Augmenting customer lifetime value with omnichannel engagement

Abstract

Organisations have long used lifetime value (LTV) to measure the value a customer represents to the business over the course of the relationship. Once a business quantifies this value, LTV informs decisions ranging from how much to spend on acquisition and engagement campaigns to how much to expend on customer service and retention efforts. In this paper, current philosophies and measurement approaches used to calculate customer LTV are briefly reviewed and an evolution of the LTV framework that incorporates omnichannel customer engagement is recommended. While current LTV inputs rely mostly on first party data such as website behaviour, e-mail open and click-through rates and paid media engagement, the value of a customer-brand relationship extends beyond interaction with owned and paid media channels. The framework proposed in this paper provides practitioners with a new approach to evaluate customer value that additionally provides insight into a new segment of potential influencer and affiliate partners and suggests that the value of customers may extend beyond their spend with a brand to include their impact on other customers' spend.