Customer Lifetime Value-Cost Matrix

The Customer Lifetime Value-Cost Matrix is a 2x2 matrix used to compare the cost of acquiring a new customer to the lifetime value of that customer. It helps businesses understand the cost-benefit of customer acquisition and retention.

At a very high level, the Customer Lifetime Value-Cost Matrix is used in the context of business, marketing, finance.

Customer Lifetime Value-Cost Matrix quadrant descriptions, including examples
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What is the Customer Lifetime Value-Cost Matrix?

A visual explanation is shown in the image above. The Customer Lifetime Value-Cost Matrix can be described as a matrix with the following quadrants:

  1. Low Cost, Low Value: Customers with a low cost and a low lifetime value are unlikely to be profitable and should be avoided.
  2. Low Cost, High Value: Customers with a low cost and a high lifetime value are likely to be profitable and should be targeted.
  3. High Cost, Low Value: Customers with a high cost and a low lifetime value are unlikely to be profitable and should be avoided.
  4. High Cost, High Value: Customers with a high cost and a high lifetime value are likely to be profitable and should be targeted.

What is the purpose of the Customer Lifetime Value-Cost Matrix?

The Customer Lifetime Value-Cost Matrix is a 2x2 matrix used to compare the cost of acquiring a new customer to the lifetime value of that customer. It helps businesses understand the cost-benefit of customer acquisition and retention.

The matrix is divided into four quadrants, each representing a different combination of cost and value. The top-left quadrant represents customers with a low cost and a low lifetime value. These customers are unlikely to be profitable and should be avoided. The top-right quadrant represents customers with a low cost and a high lifetime value. These customers are likely to be profitable and should be targeted. The bottom-left quadrant represents customers with a high cost and a low lifetime value. These customers are unlikely to be profitable and should be avoided. The bottom-right quadrant represents customers with a high cost and a high lifetime value. These customers are likely to be profitable and should be targeted.

The Customer Lifetime Value-Cost Matrix is a powerful tool for businesses to understand the cost-benefit of customer acquisition and retention. By understanding the cost and value of different customer segments, businesses can make informed decisions about which customers to target and which to avoid.


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What templates are related to Customer Lifetime Value-Cost Matrix?

The following templates can also be categorized as business, marketing, finance and are therefore related to Customer Lifetime Value-Cost Matrix: Effort Impact Matrix, Gap Analysis Matrix, Growth Share Matrix, Kraljic Matrix, Outsourcing Matrix, Quadrant Analysis, Risk Analysis Matrix, Risk Value Matrix. You can browse them using the menu above.

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