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Calagaz Commercial Printing in Mobile, Ala., Tuesday, July 26, 2011.

Are You Short-Sighted? Or Long-Sighted?

 

When you are calculating the ROI of your print, email, or multi-channel marketing campaign, how long a view do you take? Do you stop tracking revenue after a month? One year? What about the lifetime of the customer?

Lifetime customer value (LCV) is an overlooked metric that should be part of how marketers measure success. Customers gained through personalized printing campaigns, in particular, tend not just to purchase more, but to be more loyal than customers acquired through traditional methods. Thus, real ROI should include recurring revenue as well as the immediate revenue generated.

How do you determine LCV? There are a variety of factors to consider:

• Churn rate: How often do customers leave your customer base?

• Retention cost: How much does it cost you to support, bill, and incentivize your customers?

• Periodic revenue: Do you have recurring revenue streams? How much do customers spend during an average period?

You do not have to calculate out LCV indefinitely. Many companies estimate their LCV out for three to seven years.

Even if it is an estimate, LCV gives you a much better idea of what value your marketing campaigns are creating. For example, one small lawn care company sent out 300 personalized mailers, and based on the initial campaign revenue, found that the mailing barely broke even. However, the company’s customers tended to be loyal over time. For every new customer it gained, the company knew that it would have several years of recurring revenue. As a result, the owner estimated the campaign ROI at 8000% on an LCV basis. That is an entirely different equation!

How do you view your customers, on a one-off basis or over the long term?

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