How to Calculate Customer Lifetime Value and Grow Your Business

CLV i.e., Customer Lifetime Value is a metric that indicates total revenue the business can fairly expect from the single customer account. Customer lifetime value considers the revenue value of a customer, as well as compares that number to the predicted customer lifespan of the Company. 

Wondering how to businesses calculate CLV?

Firstly, calculate the lifetime value through multiplying a sale’s average value, the average period of customer retention, and the average number of transactions. 

Lifetime Value = Number of Transactions x Average sale value x Retention Period

As a customer’s lifetime value is calculated in terms of gross revenue, it doesn’t consider operating expenses. So, how much did it cost for making the product, advertise, & handle operations? Keep in mind these operating costs while calculating Customer lifetime value. 

CLV = Number of Transactions x Average Sale Value x Profit Margin x Retention Period

Or just:

CLV = Profit Margin x Lifetime Value

For increasing LTV (Lifetime Value), you have to enhance either the Average Purchase Frequency or Average Order Value. Any bump in either of these metrics will result in a boost in your LTV. Begin by reflecting on your own experience. What are those things which cause you to buy more? As a minimum, you must, of course, be sending out the thank you email to every customer at the end of every purchase. Now and then, contact them, via social media or email, and cherish your relationship. 

• The study conducted by Bain & Company found that a 5% enhancement in the retention rate can result in a boost in profit between 25%-95%. 
• Now, this makes it important that the business adopts the best Customer retention strategies for identifying and nurturing the most precious customers that interact with the Company.
• Also, proving value will ensure the fact that you enhance loyalty amongst the paying customers. 

For example, say you have got the fitness application then, every week, you can remind the subscribers of the product’s value by sending out the email consisting of their statistics, displaying how their fitness and health have improved over time. With acquisition rates so much elevated than retention, crafting amazing Customer retention strategies for maximizing revenue coming from the current customers is the sharp move. By doing the same, you will get more total revenue leading to an increment in CLV. 

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4 Important Tips for Effective Logistics Management

There are several factors included in efficient Logistics management, for instance, perfect coordination and automation. However, there is always some scope to refine the procedure and improve operational efficiency. After all, logistics management is a vital procedure because in case one thing goes wrong, it could result in heavy losses.

Have a look at the below-mentioned important tips for effective management of logistics – 

1. Adopt Automation – The business process software which offers timely updates about the goods’ movement can be combined for tracking movement and creating transparency. Besides, it also helps you to offer a better customer experience and empower security network, and hence refurbish the management process’ efficiency. Also, automation assists in handling and organizing employee and account details correctly, through utilizing particular software developed for these chores. 
2. Go for Proper Planning – In terms of Logistics management, proper planning is a smart plan, however, the experienced manager will be capable of preparing for unpredictable situations as well. These conditions can be associated with the unavailability of transportation, products, research and choose the appropriate Freight class, and any internal problem in the Company. For all of this, there is an undeniable need for a contingency plan to eliminate any logistics failure.
3. Practice better warehouse supervision – The manner you handle the storage or warehouse facilities entirely depends upon what are you shipping. In case you ship goods that are time-sensitive, such as fashion pieces or auto parts, you require the warehouse operations to move instantly to improve operational efficiency. In case you need to store the perishables, the warehouses should be properly ventilated, screened, and refrigerated. 
4. Check out appropriate transportation methods – Any Company must work towards having appropriate approaches to transporting the goods from place-to-place. Ideally, the procedure must take less time than money. For achieving that, the Company must ensure drivers utilize the safest yet shortest routes for getting to designated destinations. Also, the goods’ packaging must be such that they take less space as well as don’t require any relevant weight to the load’s total amount. 

Always remember that effective management of logistics focuses on improving the operations’ efficiency, increased productivity, and ensuring customer satisfaction. These strategies and tips for efficient Logistics management help ensure procedure optimization. Including these recommendations for the optimization of logistics network supports to increase logistics operations as well as assists to make the processes of logistics management more effective and efficient.

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Logistics vs. Supply Chain Management: What's the Difference?

Due to innovations, new technology, internal advancements, and external constraints, Supply Chain Management has developed as an improvement over Logistics. Both of these terms are advantageous for a variety of Applications & softwares for businesses as well as are, at times, utilized interchangeably. Think of the supply chain as the network of suppliers, manufacturers, retailers, and wholesalers etc., instead of a series of particular functions. While, on the other hand, logistics is more instantly tangible as it applies to the activities that are involved in transferring goods from one point to another within the supply chain. 

All in all, Logistics is the fraction of the Supply Chain Management as the latter is an umbrella term utilized for defining a whole business philosophy, including every external and internal supply chain procedure which also involves logistics. 

Let’s understand, in a bit detail, the differences between logistics and supply chain management –

• The objective of Supply Chain Management is attaining competitive advantage while Logistics Management focuses on enhancing customer satisfaction. 
• Another distinction between the two is that Logistics Management includes only a single enterprise while with Supply Chain Management, multiple enterprises (collaboration and co-ordination of parties such as intermediaries, suppliers, customers, and distributors) are involved. 
• Earlier, Logistics Management was applied for delivering any services or goods to only its ultimate customers, whereas now Supply Chain Management has become a modern and evolved concept of the same. 
• The Logistics Manager is responsible for monitoring the vendor selection as well as negotiation, transportation, inventory control, and distribution while the Supply Chain Manager monitors and manages the performances and qualifications of the vendor for ensuring the fact that they cater to the requirements of the Company. 
• One of the most important distinctions between these 2 terms is that Supply Chain Management is the broader phrase that refers to the link with suppliers to the final customer. On the contrary, Logistics Management is related to only storage and maintenance of the goods. 

Logistics and supply chain management will forever be associated since they don’t contradict but supplement each other. However, it is inevitable that everybody on your external and internal teams utilizes the right terminology for avoiding disruptions and confusion which could result in wasted money and time as well as upset the customers. Needless to say, you should not use these terms interchangeably as one procedure can’t occur without the other one. 

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