Lifetime customer value (LCV) is an idea that each customer should be analyzed in terms of current and future profitability to a brand. When a profit figure can be assigned to each customer, the marketing manager can then decide which customers to target.
The past profit that a customer has produced for the brand is the sum of the margins of all the products purchased over time less the cost of reaching that customer. This is feasible for firms which maintain their customer data like e-commerce firms and businesses selling products & services in an organized retail set-up. For other firms, there is dearth of customer data like businesses having unorganized selling channels (for eg. Kirana stores, pharmacies) and firms which have products which do not come with any warranty and hence no customer data is gathered for providing post-purchase service (for eg. Building material, paint & hardware etc.). For such businesses, a consumer panel can be built by considering a sample of consumers from all types of important markets. Frequently reaching out to this panel will generate awareness around consumer’s present consumption basket.