Today, smart marketers are beginning to tie their marketing activities to the lifetime customer value of various segments of their databases.
E-mail is a key ingredient in this approach and can be used to target marketing dollars more effectively by sending more relevant messages and offers.
Instead of blasting out a single message to an entire database, a marketer can tailor messages to customer segments based on their lifetime values, both to solidify the relationship with those customers and to try to build the value of lower-performing segments.
Targeting messages this way has other rewards, too: More relevant messaging means recipients are more likely to open and act on your e-mail and less likely to unsubscribe, go inactive or simply report your e-mail as spam.
First Step: Define and Calculate LCV
The basic definition of LCV is the amount of money a customer represents to your company, minus acquisition and retention costs, for the life of his relationship with you.