What is customer lifetime value in SAP CRM-ANA - CRM Analytics?

SAP Term: customer lifetime value

• Component: CRM-ANA

• Component Name: CRM Analytics

• Description: A key figure that expresses the profit-making potential of a typical customer within a given customer segment for specific lifetime periods of a customer relationship. The customer lifetime value is used to estimate whether it is worth investing in the acquisition of prospective customers or in the retention of existing customers in this segment. It is calculated from the customer retention rate and the average profit made per customer in a particular customer segment.

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• Key Concepts: 
  Customer lifetime value (CLV) is a metric used in customer relationship management (CRM) to measure the total value of a customer to a business over the course of their relationship. It is calculated by taking into account the customer’s purchase history, current spending habits, and potential future purchases. CLV is an important metric for businesses to understand as it helps them identify which customers are most valuable and prioritize their marketing efforts accordingly. 
  
  How to use it: 
  In SAP CRM Analytics, customer lifetime value can be calculated by using the “Customer Lifetime Value” report. This report allows users to view the total value of each customer over time, as well as the average value of all customers. The report also provides insights into customer behavior and trends, such as which customers are most likely to make repeat purchases or which products are most popular among customers. 
  
  Tips & Tricks: 
  When calculating customer lifetime value, it is important to consider factors such as customer loyalty, purchase frequency, and average order size. Additionally, businesses should track changes in CLV over time in order to identify any shifts in customer behavior or preferences. 
  
  Related Information: 
  For more information on customer lifetime value and how it can be used in SAP CRM Analytics, please refer to the SAP Help Portal article “Calculating Customer Lifetime Value with SAP CRM Analytics”.