Customer Life Value (CLV)

April 14, 2016

The “Customer Lifetime Value” (CLV), also known as Lifetime Customer Value (LCV) or Lifetime Value (LTV) is a net profit metric related to the current and projected future relationship with a customer.  Essentially Customer Lifetime Value is the dollar value of a customer relationship both present and future. Average revenue per customer is a simpler calculation based simply on dividing the profit by the number of customers. In the World of gaming, Customer Relationship Management (CRM) is just as important as it is in other industries, but there are many variables in gaming that make CRM very different. For example, a car owner will go to an auto repair shop only when their car is in need of repair. A grocery store patron will typically go to the Grocery store only when they have a need for specific type of food.A user's relationship with a game brand is a different type of Customer relationship structure. As opposed to customers that engage in purchasing behaviors on a needs basis, gamer engagement and purchasing behavior is strongly related to their game playing behaviors, relationship with the brand, games offered and additional factors. Gamers may go to a gaming site to play and/or participate in the community message boards on a daily basis. Gamers may engage in sites that require a paid membership or no membership at all. Gamers may play other gamers in online communities on a frequent basis.

 

CLV calculates a customers average profitability, accumulated over time for specific time segments. CLV incorporates numerical and behavioral predictability into its calculation and therefore is a dynamic concept.

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