The One Number To Predict Revenue (Part 9)

This single chart brings together the ideas of Velvet Rope Marketing and Net Predicted Revenue.

Once the CLV for all customers has been calculated, we get the Predicted Revenue for all present customers. This is indicated by the green and yellow areas under the curve. (Best Customers are the top 20% customers with a CLV greater than CLV0, while the middle 30% customers have been labelled Rest and the bottom 50% as Test.)

Marketing’s objective is simple: grow the area under the curve. This is what VRM does and NPR measures.

There are 5 actions that marketing needs to do:

  1. Make CLV from the Best happen: this is the core of VRM – how to provide amazing experiences to the Best Customers so they do not churn. At a minimum, the projected CLV is what must be realised.
  2. Cross-sell/Upsell to grow CLV from the Best: this is about increasing the green area by pushing the curve higher. This is where a good understanding of the customer genome combined with a martech platform to implement VRM can help create what we can think of as “100% customers” – where a brand monopolises the complete spending of the customer in a category.
  3. Nudge some from Rest and Test to Best: this can be done by analysing the Best Customer Genome, identifying the next best action for each customer, and creating the future pipeline of new Best Customers to replace some who will inevitably churn.
  4. Acquire right Next: this is about using information about Best Customers to acquire lookalikes so that the wastage that is ever-present in new customer acquisition can be reduced
  5. Help them become Best faster: this is about providing a super onboarding process for likely Best Customers to ensure they can cross the CLV0 spending threshold sooner than later

Tomorrow: The One Number To Predict Revenue (Part 10)

Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.