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Understand Customer Lifetime Value before Entering Women Health E-Commerce Market

Maneesh Sharma | Oct 5, 2017 46 views No Comments

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Customer lifetime value or CLV refers to the economic value that a customer will bring throughout their lifetime to the business. It stresses on the fact that a customer does not recognise any business in just one time transaction rather a long term relationship will add up to the value of business.



CLV is not about a single customer; it means stepping back to have a look of your consumer base on whole. It means understanding that there are a few who will never come back and some are such who will never leave. On an average, every customer has a typical lifetime and every lifetime has some economic value.

Components of CLV

1. Profit during each transaction

When we are considering CLV, our focus should be on the revenue a customer will bring throughout his life. Considering the contribution margin per unit will be better than to focus on the revenue as it may overstate the customer’s value. Marginal profits or the profit per unit is the most accurate way to know the profit associated with each commodity.

2. Knowing your customer lifetime

For this you need to indulge yourself into some mathematic calculations. If you have a data with you, firstly calculate the retention rate of your customers and then simply divide to know the lifetime of your customer.

Take last year’s customers who still are your customers in this year. For example you had suppose 100 customers in the previous year and 40 of them are again coming this year, then your rate of retention becomes 40%. Once you have arrived to your retention rate, you can calculate the life time of your customer by the formula:

CL= 1/ (1-RR), where RR refers to retention ratio.

In the above example, your CL will be, 1/ (1-.40) =1.6 years.

3. Discount rate

Discount rate is the rate of interest at which you will borrow money in the business. You should also know the real value of the customer’s cash flows in future.

If the value of the lifetime of the customer’s life time is short, the calculations will be immaterial. But if you have longer time horizon, here you will get the real consideration of time value of money. Ignore discounts if any to get the accurate results.

Women’s Health

A woman’s health refers to her overall well being not only determined by its reproduction and biological factors but also by stress, workload, nutrition etc. women’s health is gaining international and political commitment these days. Many policies and programs are enabling the women for leading a healthy life. Because of the limited awareness and access to employment and education, increasing poverty and high illiteracy have made the health of the women pathetic.

Many of the e-commerce websites which are targeting women health products like waist training corsets, exercising equipments etc have realised this sensitive issue of women health and are working for it.

The next target of e-commerce: Health care

Health care is a big concern of today’s era. Life expectancy is significantly growing due to which the demand for high quality products is increasing. Metro cities are demanding the maximum life saving commodities and services.

Major factors influencing the online healthcare services

Cost and time: The money and the time for accessing health care in metro cities is the basic issue. Online business has enabled travelling long distances of medical services fast and at a bearable cost.

Consumer Demand: Awareness of the people regarding healthcare is generating greater demand for the healthcare services in a personalised manner.

Technology: Technology is a tool to deliver what is being demanded by the customer. It offers therapeutic approaches, make cost effective diagnosis, improved quality and ways of measuring outcomes for increasing the chances of success.

To conclude we can say that e-commerce is a fortunate fruit that will shape up the mind set of health care in the world, specially the women sector as they are the one who can be benefitted at most from it.

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