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.
Typical Customer Life Value calculation (CLV) :
Average Sales Per Customer Per
Session (ASPCPS) * Average Sessions Per Week (ASPW) * Average Customer Lifespan
(ACL)
Interested in more information about
CLV? Just check out our next Blog #10 Breaking Even in the Gaming Industry and click on the links below to follow
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