Here's Why Customer Lifetime Value Is Required For AI Success

Data from a study scheduled for release on Tuesday found advertisers and marketers should think about customer lifetime value (CLV) to successfully integrate artificial intelligence (AI) and its predictive properties into advertising and marketing strategies and services.

The study conducted by Forrester Consulting and commissioned by Zeta Global captured insights from U.S. and UK customer engagement strategies. The companies fielded and completed the study in February 2024 to examine how marketers assess and apply CLV to strategies. It also set out to identify changes for more predictive approaches using generative artificial intelligence (GAI).

How was the trend identified? Metrics that marketers track to understand individual customer value is steadily increasing and will continue to rise during the next two years, the data suggests. The shift shows how value metrics will replace metrics that can only provide a historic snapshot of customer behavior.



Organizations also increasingly prioritize revenue per customer, heightening the focus on retention and value over time, rather than snapshots of what an individual customer can contribute in the moment. 

It turns out most organizations track CLV, but very few use the key metric in setting strategies, making investment decisions, and personalizing experiences across the customer lifecycle. This disconnect points to a critical gap in how data is collected and leveraged to inform forward-looking decisions that drive customer engagement and business growth.  

The study, Forrester Consulting Opportunity Snapshot, “Marketers Must Shift Their Understanding of Customer Value to be Forward-Looking," found 81% of organizations that responded to the survey have the ability to track CLV, but only 37% apply it to their company’s strategy, and just 14% maximize the value of their CLV metrics.

The disconnect points to a critical gap in how data is collected and leveraged to inform decisions that drive customer engagement and business growth.

David Steinberg, chairman, co-founder and CEO of Zeta Global, believes AI represents a new era in computing, and GAI will become the cornerstone of modern marketing strategies.

AI-powered models will shift CLV from the rear-view mirror to the windshield, he said, to empower the delivery of more predictive consumer experiences.

The findings emphasize that CLV and profit margins will increase in priority; CLV and revenue per customer will move into importance ahead of transactional vanity metrics that only provide a historic snapshot of customer behavior.

Some 83% of respondents point to the importance of aligning marketing technology to drive business success. And, on average, just 19% of respondents said their organization is fully aligned across functions. Marketers were least aligned with data science and analytics departments.

Still,53% of respondents anticipate that marketing will have more influence on business strategy, and be more effective, as more businesses apply forward-looking profit metrics to their customer value strategy. 

1 comment about "Here's Why Customer Lifetime Value Is Required For AI Success".
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  1. Shwetal Patel from Looking for new role, June 11, 2024 at 10:22 a.m.

    In my view, Customer lifetime value (CLV) and Customer acquisition cost (CAC) are the best business metrics while MMM (marketin mix modeling) contribution and ROAS are the best media omni-channel metrics. The challenge is we as an industry haven't figured how to connect easily beside deck links. I think brand elasticities over time across a total portfolio may be the best overall guide to business growth (both revenue, profilt). Thanks, Shway

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