I am working to define the CLV for customer of utility. WE add income and cost multiplicate by expected time of customer lifetime. Moreover, we include the aquisition cost. Do you have another approach?
Here is a blog by Oracle’s Toby Hatch who interviewed me for an Oracle AppCast about customer lifetime value (CLV). Toby summarizes the interview in her blog. In her blog you can click on the recording in her last paragraph.
https://blogs.oracle.com/epm/entry/customer_lifetime_value_viewing_customers
If you care to go straight to recording then click on this link:
http://feedproxy.google.com/~r/OracleAppcast/~3/7VZy9ndsGeQ/20174742_EPM_IND_03_2014_Thought-Leadership-Series-Customer-Lifetime-Value.mp3
I have attached the script. I welcome further dialog with you. As I describe in the interview, I believe using CLV is in an early stage of maturity and has great potential for marketing and sales teams to optimize profits for their organization’s shareholders.
Gary … Gary Cokins
Market price would be a maximum bound. They won't pay more than the economic ($) value they can obtain from it, under the assumption of perfect information and management control.
I thought to contribute to the discussion:
From the cost side: it would be acquisition cost+ Retention cost (there will be time value)
From value; there could be two components 1. Individual customer (Individual customer value could depend on many factors and will depend on time as well. 2. Customer as a group. In case of group, there could be normal attrition or growth.
Another factor to consider is the 'customer opportunity cost or switching cost' (specifically in normal or non-monopoly seller market). The more competitive the market is the more likely CLV be lesser.
Dear all,
Many thanks for your replies!!
@Gary, as you said CLV is a key indicator, but what's the best way to calculate the CLV. the dificultd step is concernig lifetime. We are able to calculate CV but the problem appears when we have to define the lifetime and the calculations regarding t as a part of the equation.
@Nathan, I agree and in this case electricity price is define by OMIE the spanish-portuguese entity that regulates the market price.
@Brajabllav, yes, these cost are quite important. How do you split retention cost? we are considering, services cost, maintenance cost, marketing cost (that includes customers services, complaints, ...
@Noor, switching is a key factor, indeed we are working on algorithms to understand the likehood of switchers. Regarding CLV we use Retention in order to include the switching factor. Do you agree?
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