Customer Lifetime Value Analytics

Goal

Empower the marketing team with data-driven insights and actionable guidance to achieve substantial revenue impact.

Result

Enhancing marketing effectiveness by identifying the customer segments with the highest profitability and the most effective marketing channels.

Case

Gaining deep insights into customer profitability is a fundamental aspect of driving sustainable growth and optimizing the strategic allocation of marketing resources. Acknowledging this, the following is an exploration of the customer data in the context of a consumer electronics company.

How is the Marketing Budget Being Allocated?

The analysis reveals that paid advertising commands a considerably larger budget compared to other marketing channels, with costs exceeding those of the second most costly channel (social media) by a factor of three.

How Revenue is Being Generated?

While appreciable disparities in the conversion rate are evident, the distribution of revenue remains highly consistent. This pattern raises the possibility that channels with higher conversion rates, like social media or referral, may target a smaller customer segment or generate comparatively smaller order sizes.

Which is the Channel with the Best ROI?

The ROI of email marketing far surpasses other channels, exceeding 500%. Notably, referral and social media also yield favorable returns. Conversely, the paid advertising channel demonstrates suboptimal performance, emphasizing the importance of reevaluating its budget allocation. It is recommended to allocate more resources to the email marketing channel and consider reducing investment in paid advertising.

Which is the Channel with the Best CLTV?

Referral and social media channels emerge as the clear winners in terms of generating superior customer lifetime value (CLTV) based on the analysis. Email marketing also showcases a strong performance, whereas paid advertising trails behind considerably.

These observations validate the strong CLTV associated with the social media channel. Nonetheless, optimizing the channel's reach to encompass a larger number of leads could unlock the potential for an even higher ROI.