Customers are a great asset to a company. For companies to generate revenues and increase their profits, they have to invest in customers.
Techniques or methods of focussing on customers’ interests and requirements are the Customer Lifetime Value (CLV) model and Segmentation of audiences, to make the process more effective.
The goal of CLV is to focus on finding, nurturing and retaining customers who are responsible for enhancing long-term value for the company. CLV model helps in understanding the buying profile of customers and help value business more accurately. Using accurate estimates of CLV as the basis for marketing decisions maximizes the company’s revenues.
CLV models can help in answering questions about the future purchases that will be made by the customer; to denote the time when the customer will become permanently inactive and also provide an accurate monetary value that the customer will generate in a given future time range.
On the other hand, segmenting the audience into groups provide a way for a company to target messages to customers who possess similar characteristics and needs. This technique enables marketing messages to be more relevant and direct to the customers who are reading them.
Customers are divided based on various factors like age, location, history of their purchase. A company needs to understand its customers better in order to create effective marketing campaigns. Through AI-driven segmentation, it becomes easy for a company to remove human bias, creating a less human intervention and enabling a higher level of personalization in products.
Through these approaches, companies can prioritize actions and decide on the investments to be made on advertising. They can also track the type of customers that should be targeted through advertising and also techniques to move customers from one segment to another.