Every customer who walks into your business or clicks on your website has potential. But some have more potential than others to become your best customers in the long run. Today, with the help of predictive lifetime value software, it’s now possible to predict LTV (also known as CLV) at the beginning of your relationship with a customer.
Knowing which customers are likely to bring the most return, your team can plan how to best serve and retain them into a profitable future.
Who Are Your Best Customers?
Predicting customer lifetime value can identify the highest-value customers, align internal resources, and forecast revenue for the next 9-12 months.
Especially when resources may be limited, it’s important to focus on keeping your best customers happy. You can strengthen your relationship through special offers, targeted messages, upgraded customer service or other retention strategies.
Why You Should Identify Your Top Customers
Identifying high lifetime value customers is helpful for companies because it allows them to focus their resources on the customers that are most valuable to their business.
By understanding which customers are likely to provide the most long-term revenue, companies can prioritize their marketing efforts and customer service strategies to keep these customers engaged and loyal.
Here are some specific reasons why it is helpful for companies to identify their high lifetime value customers:
- Prioritizing customer service: By focusing on high lifetime value customers, companies can prioritize their customer service efforts to ensure these customers receive the best possible experience. This can include offering personalized support, responding quickly to inquiries and complaints, and providing special perks and incentives to keep these customers happy and engaged.
- Targeted marketing efforts: Companies can also use their knowledge of high lifetime value customers to target their marketing efforts more effectively. For example, they might create personalized marketing campaigns designed specifically to appeal to these customers, or use targeted advertising to reach them where they are most likely to see it.
- Maximizing revenue: High lifetime value customers are typically more profitable for companies than other customer segments, since they are likely to make multiple purchases over time. By identifying these customers and keeping them engaged, companies can maximize their revenue and profitability.
- Referral opportunities: Satisfied high lifetime value customers are more likely to refer their friends and family to the company, creating additional revenue opportunities through word-of-mouth marketing. Companies can encourage referrals by offering incentives or rewards to customers who refer new businesses.
Identifying high lifetime value customers is essential for companies that want to maximize their revenue and build long-term success. By prioritizing these customers and tailoring their marketing and customer service strategies accordingly, companies can create a loyal customer base that will continue to support their business for years to come.
How to Identify Top Customers
Predictive analytics, powered by artificial intelligence, uses statistical algorithms and machine learning techniques to analyze historical data and identify patterns in customer behavior that are predictive of future customer value. While business intelligence (BI) tools might look at LTV retroactively, predictive analytics looks into customers’ future.
The algorithm takes into account a variety of factors, such as the customer’s purchase history, demographics, and behavioral data, to create a predictive model that assigns a value to each customer’s future business.
The predictive model can then be used to identify customers who are likely to have a high lifetime value and target them with customized marketing campaigns to increase their engagement and loyalty.
By focusing on high lifetime value customers, companies can improve their return on investment and allocate their marketing resources more effectively.
Additionally, predictive analytics tools can help companies identify customers who are at risk of churning, allowing them to take proactive steps to retain those customers before they switch to a competitor.
In addition to predicting each customer’s lifetime value, Pecan’s low-code predictive analytics software provides detailed information about which factors contributed most to each customer’s prediction.
Those details can help you assess which aspects of your business are contributing to bringing in and retaining high-value customers. And, of course, you can see where you might want to make changes.
Use your data to predict who the most rewarding customers will be, which products and services they will want, and how you can plan accordingly. Your competitors may focus on getting lots of customers.
However, quality is more important than quantity for long-term success and efficient growth. Happy high-value customers bring in others like them, too.
Understand What Drives Future Customer Behavior
Pecan AI uses machine learning algorithms to create accurate, impactful predictive models for customer lifetime value. Using customer and transaction data from the past, these predictive models are built on our platform by data analysts, without data science resources. You can see which customers will be the greatest assets to your business for the long haul, without spreadsheets or calculations.
Pecan AI helps organizations of all sizes create predictive models for lifetime value. For example, with Pecan AI, teams can:
- Develop and refine upsell/cross-sell opportunities and marketing initiatives
- Predict customer revenue and increase margins for the next 12 months
- Identify VIP customers within 14 days
- Improve marketing efficiencies by 20%
Modeling pLTV for Future Success
Predicting customer lifetime value gives you foresight about customers’ long-term potential — empowering your team with knowledge of the future, and ensuring you focus on the customers who are most valuable for achieving your critical KPIs.