I have often wondered why people use lifetime value over and above lifecycle value, or at least why they don’t use the two in tandem. In my opinion, lifetime value implies a customer who has come to the end of their spending life with a company. It allows us to predict the possible value we believe a particular customer or type of customer will give to us over the course of their lifetime with us. By lifetime I mean the amount of time they spend engaging with us, whether that is in terms of spend or recommending us etc. Lifecycle value, on the other hand, allows us to predict the value to the business of a particular customer or type of customer in terms of the interaction they may have with us at a specific time. I won’t try to explain either of these concepts in detail, Jim Novo in his book ‘Drilling Down’ does a far better job than I.

My point is this. The use of lifetime value implies a relationship with a customer that is already over. There is no possibility of further engagement or value of that customer to the business. It is a closed relationship that is based on historical data.
The use of lifecycle value, on the other hand, implies a relationship that is not yet finished. There is the possibility of just one more purchase. It is an open relationship that is based on current or the most recent data.
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