Final answer:
Customer lifetime value (CLV) is a metric that represents the total net profit a business can expect to make from a customer over the entire duration of their relationship with the business. Methods of increasing CLV include reducing the discount rate, increasing the customer retention rate, and increasing the margin. Increasing the customer defection rate, on the other hand, is not a method of increasing CLV.
Step-by-step explanation:
Customer lifetime value (CLV) is a metric that represents the total net profit a business can expect to make from a customer over the entire duration of their relationship with the business. Increasing CLV is crucial for business success, and there are several methods to achieve this:
- Reduce the discount rate: By reducing the discount rate, businesses can encourage customers to make more frequent purchases, increasing their overall lifetime value.
- Increase the customer retention rate: Retaining existing customers is key to increasing CLV. By providing excellent customer service, personalized offers, and loyalty programs, businesses can incentivize customers to continue buying from them.
- Increase the margin: Increasing the margin refers to increasing the profit margin on each sale. By offering premium products or services and implementing cost-saving measures, businesses can boost their overall revenue and CLV.
Out of the options given, increasing the customer defection rate is NOT a method of increasing customer lifetime value. Higher customer defection rates indicate that more customers are leaving the business, which can negatively impact CLV.