Lifetime Value Tutorial - Entering Your Data

Entering Your Lifetime Value Data

Because the Lifetime Value model requires a specific data format, users with their own data should review the pre-formatted template to learn about the appropriate structure.

A lifetime value analysis consists of at least two data blocks with an optional third data block:

• Segment data (required) describes the various segments of the customer base to be analyzed.
• Transition matrix (required) describes the percentage of customers who migrate among the segments during each period. 
• Acquisition scenario (optional) specifies how many new customers are introduced each period.

Segment data

Data consists of segments (rows) that consist of the name of the segment (in the grey index column), customer count in that segment at the start of the analysis, margin for each customer, the next period costs of maintaining that customer (optional), and the cost of acquiring a customer in the segment (optional).

Segment data consists of:

• Index column which consists of the Segment name.
• Count: Number of customers per segment. As of today, how many customers does the company have in each segment?
• Margin: Gross margins, or the average margins that the company expects from a customer over each period (e.g., year, quarter), on the basis of the segment to which this customer belongs during that period. In the above example, a customer who belongs to the "Segment B" segment should generate $225 of gross margins on average.
• Next-period costs: How much money the company plans to spend per customer during the next period, according to the segment to which this customer belongs at the beginning of the period. Typically, active customers are followed more closely, receive more attention (e.g., direct marketing solicitations, sales representatives visits), and cost more to the firm. 
• Acquisition costs: The cost of adding brand new customers to each segment. Requires the Acquisition scenario table (see below). If the Acquisition scenario table is not included, this column will be ignored during analysis.

Transition matrix

Data consists of segments (rows and columns) where one can specify the percentage of customers who move among the segments each period.  In the above example, 75% of Active customers in period 1 will remain Active in period 2.  25% of Active customers in period 1 will become Warm customers in period 2. Each row must total 100%. If the row does not total 100%, Enginius will scale the data to a total of 100%. 

Acquisition scenario (optional)

Data consists of the segments and periods where new customers “enter.” These are new customers that were not part of your original Segment Count data. There should be one row for each segment that has new customers. The columns define the periods of the study and depict how many customers are added in that period. The value of the last period specified will be replicated indefinitely. To stop new customer additions, set the last period to zero.