Watch This Free Webinar On-Demand: http://dg-r.co/2fuk0LO - Maximize Customer Lifetime Value In 2017 by Leveraging Your 2016 Wins Learn why Customer Lifetime Value is a critical metric that can improve your ABM plan & shape your 2017 budget You worked hard in 2016 to target and convert the accounts and prospects with the highest propensity to buy. Now you need to keep those new customers happy while continuing to expand those relationships. Join Matt Zelen, SVP of Customer Success at Act-On Software, and learn how you can maximize your customer lifetime value in 2017, including: • Why customer lifetime value is a vital strategic metric for your business; • How both customer lifetime value and customer acquisition can help determine marketing budget in 2017; • Tips and tricks to creating a long-term, strategic approach to defining customer lifetime value; and • How CLV positively impacts account-based marketing initiatives.

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Maximize Customer Lifetime Value In
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Featured Speakers
MODERATOR:
Andrew Gaffney
Editorial Director
Demand Gen Report
Matt Zelen
Chief Customer Officer
Act-On Software
@Matt_Zelen

8. Agenda
• Overview of CLV/CAC ratio and
why it’s important
• Understanding Customer Lifetime
Value (CLV) &
Customer Acquisition Cost (CAC)
• How to use the CLV/CAC ratio in
day-to-day marketing decisions

9. Modern B2B
marketers have
learned to coexist
with chaos
Marketers are inundated
with metrics that offer
countless ways to dissect and
evaluate their campaigns

10. CLV/CAC: The Formula to Find
‘True North’ on Your Marketing
Map

11. Did your business make more money
from a customer than it spent to
acquire that customer?

12. The Formula to Find ‘True North’ on Your Marketing Map
“The expected lifetime value of a
customer represents the maximum
allowable acquisition cost of that
customer. Then using those numbers,
you can craft a marketing budget that is
related to firm profitability versus some
fussier method of budgeting for
marketing expenses.”
—Ruth Stevens, President, eMarketing Strategy
“ “

13. CLV/CAC Can Help
Answer Crucial
Questions
Are you finding your most valuable
customers?
Are you targeting them effectively?
Are you making the most of the relationship
once you win their business?3.
2.

14. Part I: Understanding CLV
Customer Lifetime Value

15. The word “lifetime” is the one that
matters when looking at what the term
really means to marketers.
What is CLV?

16. Calculating CLV

17. Two Rules Will Get
You 90% of The Way
There
These are common-sense
marketing metrics. It’s important
to keep them that way.
Consistency is key. Pick the
right formula for your business
and use consistently.
2.

18. How Should You
Calculate CLV?
What is the average sales value of your first
transaction with a customer?
How much do you typically make per year
from a customer after the first purchase –
including cross-sell and upsell revenue (if
relevant)?
How long does a typical customer continue
to do business with you? (The answer,
ideally, will be in years – not months or
weeks.)
3.
2.

19. How Do I Know if
My CLV is Good or
Bad?
How much you spent to acquire a customer
Whether businesses like yours typically
generates significant revenue from
return/repeat customers
How much you typically spend to maintain
these ongoing customer relationships
3.
2.

20. What’s the Most
Important Mistake to
Avoid When
Calculating CLV?
The biggest mistake, by far, comes
back to the word lifetime –
marketers who calculate customer
value based only upon the value of
the first sale.

21. How Can I Use CLV to
Improve Marketing
Effectiveness?
1. A complete view of CLV
allows you to track the impact
of your customer onboarding,
retention, upsell / cross-sell and
loyalty programs

22. How Can I Use CLV to
Improve Marketing
Effectiveness?
2. CLV can also be used to
determine how much should
be spent on marketing
investments

23. 3. By identifying and comparing
your “best” customers’ CLV to
the average CLV for your customer
base as a whole, you’ll be able to
determine how much those “best”
customers are truly worth – and how
much you should invest in acquiring
them.
How Can I Use CLV to
Improve Marketing
Effectiveness?

24. Part II: Understanding CAC
Customer Acquisition Cost

25. The key to defining CAC is the
word acquisition
What is CAC?

26. Divide the amount your marketing
organization spends on customer
acquisition during a specific period by
the number of customers acquired
during the same period
How Do You
Calculate CAC?

27. How Do I Know If
My CAC is Good or
Bad?
What’s the best way to uncover
this cost to value ratio?
This is where CLV/CAC once
again enters the picture
(I promise we’ll get there!)

28. What’s the Most
Important Mistake to
Avoid When
Calculating CAC?
A lack of context when you
calculate CAC and use this
metric to make decisions and
assess marketing effectiveness.

29. Fine-tuning your email, landing pages,
forms, and other touch points
Improving on-site ecommerce
conversion metrics
Experimenting with tactics such as
inbound and referral programs
3.
2.How Can I Use CAC to
Improve Marketing
Effectiveness?

30. Part III: Mapping a Path to Profit
A Closer Look at the ”Compass Metric”

31. CLV/CAC =
Compass Quotient (CQ)
One Number to Rule
Them All

32. An Example of CQ
For CLV let’s assume a customer generates $50,000
in revenue during a three-year timeframe.
For CAC let’s assume it cost $15,000 to acquire this
customer.
Using CLV/CAC (50,000 / 15,000) we get a
quotient of 3.33

33. 7 Keys to Getting Your Bearings When Analyzing CQ
The CQ is (within reason) a self-contained marketing metric
The CQ is a historical metric rather than a predictive metric
The CQ offers a clear “redline” for identifying urgent and fundamental business problems
The CQ can’t tell you whether a business is (or will be) profitable
1
2
3
4
5
6
The CQ can include customer retention costs
… but including retention costs is not always important or helpful
7
The CQ offers powerful insights to assess marketing performance and support a marketer’s
decision-making process

34. Insight to Impact:
Using CQ in Day-to-Day Marketing Decisions

35. Using CQ in
Day-to-Day
Marketing
Decisions
Build a More Valuable
Customer Base

36. Using CQ in
Day-to-Day
Marketing
Decisions
Minimize Risk Due to
Customer Churn

37. Using CQ in
Day-to-Day
Marketing
Decisions
Other Places to Apply
CLV/CAC

38. The Most Useful Aspect of
The CQ is its Flexibility

39. A few of the 4,000+ customers that can attest to this vision
We believe in making it simple for any marketer to master today’s
customer journey.
We enable marketers to focus on strategy, creative, and customers -
not the underlying technology.

40. www.act-on.com | #ActOnSW | @ActOnSoftware
Questions?
Contact Us:
+1 (877) 530-1555
sales@act-on.com
See a Demo:
www.act-on.com/live-demo

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Q&A / Speakers
MODERATOR:
Andrew Gaffney
Editorial Director
Demand Gen Report
Matt Zelen
Chief Customer Officer
Act-On Software
@Matt_Zelen

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