Marketing Analysis Toolkit: Customer Lifetime Value Analysis (2010) Harvard Business School Note and Quantitative Analysis Toolkit (Thomas Steenburgh and Jill Avery)
Customers are increasingly being viewed as assets that bring value to the firm. Customer lifetime value is a metric which allows managers to understand the overall value of their customer base and relate it to three customer strategies firms employ: asset acquisition – attracting new customers to the firm, asset maximization – maximizing the value the firm extracts from each customer, and asset retention – retaining existing customers for the long term. The note gives students a foundation for analyzing marketing cases, as well as providing an analytical structure and process for completing a marketing plan. The note is accompanied by a free Excel worksheet which contains sample problems, prebuilt Excel models to calculate customer lifetime value, and charts and graphs which help visualize the results.