Supplement | HBS Case Collection | July 2010

Marketing Analysis Toolkit: Customer Lifetime Value Analysis (CW)

by Thomas J. Steenburgh and Jill Avery

Abstract

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.

Keywords: Competency and Skills; Customer Relationship Management; Customer Value and Value Chain; Decisions; Framework; Management Practices and Processes; Marketing; Marketing Strategy; Strategic Planning; Mathematical Methods; Value;

Citation:

Steenburgh, Thomas J., and Jill Avery. "Marketing Analysis Toolkit: Customer Lifetime Value Analysis (CW)." Harvard Business School Spreadsheet Supplement 511-702, July 2010.