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Customer worth and customer lifetime value: What's the difference?

Expert Martha Rogers defines customer worth and customer lifetime value and explains how they are different.

What is the difference between a customer's worth and a customer's lifetime value?
We've been working with the term customer lifetime value (CLV) for a long time and we know that it is divided into actual value -- the current, predictable value, based on things we know now, and a customer's potential value -- how much a customer could be worth if we knew more about the customer, used that information to anticipate what a customer needs and could be there in exactly the way the customer needs over time. If we could, in fact, be worth the most possible to a customer, then we could close the gate between the customer's actual value and the customer's potential value.

Now, if we compare the idea of "lifetime value" with a customer's "worth," we are possibly into a semantic difference....

It is possible that at some organizations the term "worth" will simply mean the same thing as lifetime value, or it's possible that what we mean is how much the customer could be spending somewhere, whether it's with us or another company. For example, if a bank is measuring a customer's worth, then that customer is being evaluated on what the total assets of their holdings would be. Then, we could use that as a basis to start thinking about share of customer or something similar.

So, it's not that customer worth and CLV are not linked, but lifetime value is probably more directly related to the customer's value to the company and that is interlinked with the value of the company to the customer, whereas customer worth might be something that's really more about the customer's value to himself.

Hear more in Creating Customer Value, a SearchCRM.com monthly podcast series with Peppers and Rogers.
This was last published in January 2008

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