Treat Customers Based on Their Values

in Scott Gruher’s blog post on “Go to Market Strategy: How Much are Your Customers Worth?”, his recommendation is to treat customers based on their values.

He suggests measuring two basic metrics: CLTV (Customer Life Time Value) and CAC (Customer Acquisition Cost). Those metrics should both be measured accurately, as based on the outcome, a company should decide how to treat its prospects/customers:
Low CLTV would mean to use a less expensive resource to handle prospects/customers (i.e. non-direct contact such as email).
On the other hand high CLTV would mean considering a one-on-one contact with the prospect/customer.

This principle would increase conversion rates from prospects and maximize penetration rates withing current customers.

As for the CAC, Scott recommends focusing on existing leads as it more profitable to cross-sell and upsell an existing customer than acquiring a new one.

I agree it is much more effective to reach out customers from a dedicated list.
I also agree, as posted in my previous post, that CLTV and CAC are crucial metrics which should be measured accurately in order to spot potential buyers.
However, CTLV and CAC are not the only metrics a company should measure – there are other metrics (such as churn rates, account activation rate, account usage statistics, etc.), that should be taken under account in order to perceive a business whole picture.

In addition, in order to reach the right conclusions out of those metrics and know where to focus on, it is essential to wisely choose tools that would help a business to both measure and analyze its data correctly.

Guy Nirpaz

I'm the CEO and Co-Founder of Totango. I love people and technology and I've dedicated my career to tech that will improve the way people do business. Prior to starting Totango I worked in the space of real-time big data as EVP of Engineering at GigaSpaces and as Chief Architect at Mercury.

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