My customer is worth how much?
In today’s world of data collection and loyalty programs, brands still don’t know what their customers are worth.
Brands would like this information. There are ways for them to obtain it. It’s not rocket science.
Let us start with a basic definition of customer lifetime value or CLTV.
“CLTV is the value a customer contributes to your business over the entire lifetime at your company.
It is a very important metric and is used while making important decisions about sales, marketing, product development, and customer support.” This definition is from the Economic Times.
In February 2015, Nielsen fielded an English-only survey of more than two thousand adults in an attempt to determine which alcoholic beverage drinkers are the most open to trying new brands.
They interviewed beer, wine, and spirit drinkers.
Where are the adventurers?
It appears that those who drink wine are the most brand adventurous-19% have bought 10 or more wine brands in the past year.
Comparatively, only 15% of beer drinkers and a mere 5% of spirit drinkers have tried the same number of brands.
Meanwhile, spirit drinkers were most likely to stick to their favorites.
60% of spirit drinkers, 48% of beer drinkers, and 43% of wine drinkers have purchased only one to three brands of their alcoholic beverage of choice in the past year.
Forbes Contributor H.O. Maycotte, stated in 2015, “A recent Entrepreneur article called lifetime value one of the most important metrics in business. Mainly because it can give you an idea of how much repeat business you’re likely to get from someone.
The article also referred to it as one of the easiest metrics in business. However, according to an Econsultancy study, only 42% of companies say that they are able to measure customer lifetime value.
Why is CLTV such a challenge for such a large percentage of companies?
“The Econsultancy report states it’s in large part because so many organizations are operating in disconnected silos and lacking in integration, making it difficult for them to manage LTV.
As someone who runs a business that’s devoted to helping companies extract as much value as possible from all the customer data that’s available to them, that struck a chord with me.
I truly understand how problematic silos can be, and believe that a unified, coherent approach to data and operations is an essential part of running a business.” From https://www.forbes.com/sites/homaycotte/2015/08/25/customer-lifetime-value-the-only-metric-that-matters/#41b0cc393876
At the heart of CLTV or consumer lifetime value is loyalty.
We have to launch a relationship, foster it, reward it, and then continue to make people feel special. We must offer them a chance to be part of something bigger than themselves.
What is CLTV in the spirits, wine, and beer business?
Let me give you a real example.
I was in a liquor store about 5 years ago when I was shopping for a vodka. My wife and I go through about a “handle” a month or one 1.75 Liter bottle. This is the equivalent in most cases to anywhere from $17.00 to $24.00 a month for our purchases.
The staff recommended Score at the time.
I trusted her and made the purchase. I’m a value shopper so the $10.99 price for a .750 Liter bottle at the time was good.
For 5 years now, I’ve been a loyal Score buyer amongst the mix of other value brands I buy.
Do you think Score knows that I, personally, have spent upwards of $1200.00 over the last five years on their product? I can assure you they don’t.
Could they have known? Yes. Why is it not important to them?
Technical solutions facilitated by mobile apps and streaming apps are beginning to enhance the relationship consumers have with forward-thinking brands.
Setting this data collection in motion isn’t difficult and it isn’t that expensive.
If you’re not thinking about innovative ways to build a relationship with your end-user, your competition will be doing so.
Make decisions that lead to your own disruption prior to some outside force disrupting you. That will leave you with no control.
Shared Spirits is delivering a platform that for the first time in spirits, wine, and beer sales history will provide data on the consumers who love brands.
Buying habits, sharing habits, granular details on retail buys, and more are all available.
In other words, your customer’s lifetime value will be known and you’ll get to decide how much that information is worth to your brand.
Sherman Mohr serves as Co-Founder and CEO of Shared Spirits. Shared Spirits and Shared Spirits Marketing is a marketing and technology firm specializing in the influencer, ambassador, and activation activities for spirits, wine, and beer brands.
If you’d like to discuss what Share Spirits Market can do for your brand, we’d love to talk about your business. Click here for the free hour!
Originally published at https://sharedspiritsmarketing.com on June 23, 2020.