By Group6
 Jatin Chhillar (40721104)
 Shashank Pandey (40721192)
Delhi Skill and Entrepreneurship University
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TABLEOF
CONTENT
 1. Customer Lifetime Value
 2. About UN Broadband
 3. CLV Calculation Method
 4. Improving CLV
 5. Some applications of CLV
 6. CLV Reliability
 7. CLV Difficulties
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CUSTOMER LIFETIME VALUE
Customer Lifetime Value is an important metric for measuring where your business is right now
and forecasting future profits because it demonstrates how long a customer is expected to keep
purchasing from you and how much money they are expected to spend during that time.
Customer lifetime value is a customer's total net profit to a company over their life.
The concept of lifetime value may be applied to customers in many ways, such as: examining
the customer purchase history, forecasting future interactions with the business or considering
customer referral values.
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The lifetime value can be enhanced by increasing the number of transactions per year and
increasing customer retention rates.
Let us start by considering a simple description of lifetime value in terms of revenue. The person
who has purchased four cars from a car dealer over the past ten years with an average cost of Rs.
4,00,000 may be viewed as a Rs. 16,00,000 per customer. However, more relevant is the fact that
this customer, if retained over the rest of their car purchasing life of 25 years, may buy ten more
cars. If they cost the same amount this represents Rs. 40,00,000 in terms of lifetime revenue.
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ABOUT UN BROADBAND:
UN Broadband is an Internet Service Provider in East-Haryana with more than 20k+ household
users and 2k+ industrial users. It is known to provide top service in the following categories:
Internet Service Providers, Wi-Fi Internet Service Providers, Broadband Internet Service Providers.
Over the course of its journey, this business has established a firm foothold in its industry. The
belief that customer satisfaction is as important as their products and services, have helped this
establishment garner a vast base of customers, which continues to grow by the day. In the near
future, this business aims to expand its line of products and services and cater to a larger client
base.
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MAJOR FINDINGS
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HOW THEY CALCULATE CLV?
By analyzing cohorts, we can predict CLV. Customer cohorts are groups of clients who made
their first purchase in the same month and have similar characteristics. The average
revenue is calculated for each cohort, rather than for each individual. By analyzing cohorts,
you can also figure out how many loyal clients you have, locate the points where purchases
drop off, and accurately evaluate ad campaigns.
On the basis of 3 months data, they are guessing how long customers will stay with them.
Depending on business strategy and industry, we should adjust the CLTV (or CLV) formula
for a more accurate result.
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IMPROVING CLV
 Launch a loyalty program: It's possible to earn points through a variety of methods, such as
client cards and mobile applications.
 Improve your customer experience: All touchpoints with customers (online and offline
stores, support centers, social networks, etc.) should be monitored continuously.
 Work with disappointed customers: Work through customer objections and offer
alternatives to prevent potential customer dissatisfaction.
 Cross Selling and Up-Selling: When organizations model their potential future profit, they
need to take into account the fact that individual consumers may be persuaded to buy other
products – cross-selling, or more of an existing product over time – upselling.
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APPLICATIONS OF CLV
• Conversion of customers: It's important for businesses to know how much money
customers spend with them over time - whether it's Rs. 50k, Rs. 500k, or Rs. 5000k.
• Improve forecasting: The CLV calculation can help you predict future needs for your
product or service. When you have this information at hand, you can make informed
decisions about your workforce, inventory, or other resources.
• Development of new products: The product team may not be focused on revenue goals
on a daily basis, but strategic decisions about how engineering resources are spent should
be based on business impact. Customers' lifetime value can inform the design of a product
based on what customer segment it should target.
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CLV RELIABILITY
Even with flawless data, statistical models of CLVs can never provide precise predictions.
However, a model such as this can serve your needs if you take a reasonable amount of care.
The figure doesn't have to be exact. It is helpful to be able to compare the advantages of
marketing programs and sales strategies. Providing usable information is what you need. This
type of analysis may help you identify areas for improvement in your business or marketing
strategy and make changes that will improve your ability to predict future revenues from
customers who are most likely to return and to spend more money on your products or
services over time.
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DIFFICULTIES WHILE CALCULATING CLV
• Churn Rate: The cause of customer churn is complicated, and many factors combine to cause a
customer to leave your business. Build an amazing shopping experience for your customers so
that they stay with you.
• Discount Rates: As internet and technology are the dynamic sectors, thus it becomes difficult to
have a consistent discount rate. When there arises more competition even a higher discount rate
of 15% to 20% right be appropriate, as it will reflect the uncertainty going forward.
• Fail to take into account customer acquisition costs: Customer Acquisition Cost is something
that changes periodically due to various reasons like number of sellers. Hence, it becomes
difficult to take the precise customer acquisition cost.
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Thank you
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