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HBR Tools: Customer Lifetime Value

Struggling to meet aggressive revenue targets with limited marketing resources? Determined to figure out which customers to invest in and which to ignore but not sure where to begin?HBR's Tool: Customer Lifetime Value will get you started.

Based on the work of leading business school faculty Jill Avery (Harvard Business School) and Thomas Steenburgh (Darden School of Business), this tool gives you a rigorous yet efficient process to determine how profitable all your customer segments are throughout their relationship with your company – and what steps to take to increase their value. You'll learn how to: Segment your customers: Break your customers into distinct subgroups and compare their long-term profitability. Calculate acquisition costs per customer: Figure out how much to spend to acquire your best customers. Determine customer retention: Identify which customers are worth retaining and how much to spend to keep them coming back.