ABSTRACT
In Hansen's and Parchetas Application of Customer Lifetime Value (CLV) to Consumer Package Goods (CPG) paper, they found customer equity (CE) trends to prelude sales trends by six months. Marketing accountability in fast-moving consumer goods (FMCG) businesses has been limited to the measurement of short-term sales and profit returns from marketing. Hence, marketing managers are now more likely to make the right tradeoffs to deliver required short-term return on investment (ROI) and market share gains. CLV is the standard method for measuring the success of customer relationship management (CRM) programs. CLV represents the net present value (NPV) of the future profits to be received from a given number of newly acquired or existing customers during a given period of years. The purpose of marketing is more about attracting and building relationships with customers than just generating incremental purchases. Common marketing measurement metrics, like marketing mix models or test markets, focus on the product using recent short-term product sales.
