Marketers struggle with Customer Lifetime Value

Despite its importance to modern marketing, 80% of marketers don’t fully understand customer lifetime value (CLV or LTV), research from the CMO Council shows, but there are ways to fix this.

What is it

Simply, CLV measures the total value of a long-term customer relationship, which allows marketers or growth teams to apportion marketing spend (customer acquisition cost). Keeping this ratio in check is the name of the game.

Why it matters

A standard in tech, B2B and service brands but a vital tool to marketers all around, it is misunderstood at a high level. Knowing there’s a problem can at least help to fix it.

Results

• Just under half (47%) of marketers say they track LTV either slightly well or not well at all.
• Only 17% say they track LTV well.
• 44% rate their ability to segment and target toward long-term value at just ‘slightly effective’ or below.
• Over two thirds of marketers (68%) say their lifetime value to customer acquisition cost (LTV-to-CAC) ratio was average, below average, or very poor.

Methodology

Based on insights gleaned through in-depth interviews and a survey of 150 global CMOs, the report was put together by Deloitte Consulting on behalf of the CMO Council. You can find the report here.

Sourced from the CMO Council, WARC