Justifying Marketing with Customer Lifetime Value

Your task with this activity is to defend the recent expenditure of a marketing campaign. The key to your argument will revolve around the customer lifetime value concept. So review the following statement and determine how you could you defend the marketing program.



Assume that the following statement was recently made by a manager from your firm:

“Our firm just ran this big campaign to get new customers.  And did you know that they spent around $1m and they only got 1,000 new customers! I think that’s really dumb because we only make an average of $500 a year from our customers. And some of them are only customers for a year!!! OK, some are customers for up to 5 years, but it takes a long time to get our money back. I just think that they don’t know what they’re doing in marketing!”



  1. How would you respond to the above statement (assuming that you worked in marketing)?
  2. How could you use the concept of customer lifetime value (CLV) to help strengthen your argument?
  3. Do you think that this particular manager could be convinced by your view? Why/why not?
  4. Does this situation illustrate a problem with the firm’s internal marketing (communications) activities? What should be done here?