Target Audience · Segment value · Component
The lifetime value
What a customer in this segment is worth over the relationship — spend, margin and duration together rather than revenue alone.
The deliverable
What it is
Lifetime value calculated on revenue overstates every segment and overstates the low-margin ones most. Contribution is the correct basis and is rarely used because it is harder to obtain.
Duration matters as much as spend. A segment spending half as much and staying three times as long is worth more, and the revenue ranking says the opposite.
One level in
What it is made of
Each element is a constituent part of the component. Follow one to see the attributes it carries.
The spend
What a customer in this segment spends per period.
3 attributes: Annual spend · Expansion rate · Distribution
LearnThe duration
How long a customer in this segment stays.
3 attributes: Average tenure · Annual retention · Confidence
LearnThe value
The resulting figure, on contribution rather than revenue.
3 attributes: Lifetime value · Margin used · On revenue basis
Learn
A segment spending half as much and staying three times as long is worth more. Revenue ranking says otherwise.
The other components in segment value
The acquisition cost
What it costs to win one, fully loaded — because the reported figure excludes most of what winning a customer actually takes.
LearnThe ranking
Segments by contribution, held against the ranking by revenue — because where the two orders differ, effort is in the wrong place.
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