Why do some customers have a low or negative CLV value?

Question:

Why do some customers have a low or negative CLV value? What approach can retailers take with these customers to minimize their impact on the bottom line?

Answer:

Customers are given high priority in any business organization and the firm takes several steps to satisfy its customers and offer the best products and services to retain them.

The lifetime value of customers refers to the time period for which the customers would buy the products or services from the seller and will be creating a value for the seller in terms of its sales and profits.

The reason why some customers have a low or negative CLV value could be that the customers might not be properly aware to make the best use of the product or the services offered to them by the retailer’s side. It could also be the case that the product offered by the retailer is not demanded by the customers in the market or they might have carried bad experience or dissatisfaction attached with that product/service. These could be the reasons why some customers have a low or negative CLV value.

The approach that retailers can undertake with low lifetime value customers to minimize their impact on the bottom line is that the retailers need to take feedback from the customers and has to improve the loopholes in the product/service offering. This will allow the retailers to offer the right product to the right customers and obtain lasting lifetime value of customers. The retailer has to attract the customers to make a second purchase because when the customer will buy goods or services from the retailer the second time, it will increase CLV.

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