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Customer Lifetime Value

Definition

What is Customer Lifetime Value?

Customer lifetime value or CLV is a metric that determines how beneficial a customer is throughout their commercial partnership. This is calculated using two main variables: cost of purchase and sales, though some companies may incorporate additional considerations.

Customer Lifetime Value is one of the main stats likely to be measured as part of a customer service campaign. It gives competitive merit to every customer-centric company. Further, this metric attracts a growing number of consumers to learn that the most important commodity in the company is its customers and not its inventory.

Importance of customer lifetime value

Organizations use customer lifetime value to determine if the risk of attracting new consumers is worth it in potential sales. CLV is also essential for the customer segment. Some consumers are more profitable than others. So, companies should research the profiles of people with the highest customer lifetime values and aim to attract more of these kinds of customers.

CLV determines how important a customer is to your business over an indefinite time rather than just the first order. This metric aids in determining a fair acquisition rate. Customer Lifetime Value should be used by management in a call center to go beyond delivering service quality and how value can be added by extending the life of the customer.

 

What is Customer Lifetime Value?
What is Customer Lifetime Value?
Outsourcing FAQ

What is Business Process Outsourcing (BPO)?

What is Business Process Outsourcing BPO?

Business Process Outsourcing (BPO) is the engagement of services from a third-party provider. BPO uses various technology-enabled services to hasten the delivery of services. The business activities could be back-office such as, but not limited to, payroll, accounting, human resources, or front office jobs like customer service, sales, and marketing, etc. In the case of content providers, these business activities could mean hiring writers, remote editors, or virtual assistants.

BPO speeds up processes and enhances efficiency. Companies that outsource some of their business activities use their time on core services and competencies. With this shift in focus, companies improve their current processes that may result in improved customer satisfaction. BPO helps companies divert their resources to more critical business strategies. Often, companies find it impractical to hire a full-time position in-house because of the cost associated with doing so.

How does Business Process Outsourcing work?

When a business engages an external specialist to manage and operate some of its internal processes, it's referred to as business process outsourcing. Such ‘processes’ include customer service, accounting and finance, or sales. It is different from hiring an agency to do specific tasks, as the outsourcing provider (BPO) is more concerned with the ongoing production of labour-intensive tasks, instead of the higher-level strategy and guidance.

Now, business process outsourcing has broadened and is more akin to staff augmentation, or staff leasing.

What are the benefits of business process outsourcing?

There are many benefits to outsourcing, as well as some downsides and risks. The common benefits include:

Cost savings: significant savings of up to 70%, leveraging the lower global salaries Global market: access to a bigger employment pool of talent Global presence: having operational across the globe increases trade opportunities Flexible workforce: reduces internal local labour and employment compliance obligations Leverage skill: leveraging the skills of other specialist companies Focus: enables the client company to focus on their core functions

 

Business process outsourcing examples

The business process outsourcing sector is a vast industry, generating over $200bn annually, and employing many millions of people worldwide. Some examples include:

Big enterprise

Facebook and Uber outsource many of their operational functions, including content moderation for Facebook, and customer service for Uber

Medium-size businesses

A medium business with 50-500 staff might outsource the labour-intensive accounting and finance functions to a team in the Philippines.

Small business and entrepreneur

It is common for small business owners to have a Virtual Assistant (VA) working for hem full time, remotely from the Philippines.

What are the different types of BPO?

The type of business process outsourcing can be characterised by their specialisation, location, and size.

Generalist or specialist BPOs

Business process outsourcing is in the human resources and professional services sector. However, their services extend across all industries. The majority of BPOs are generalist, in that they offer a full range of professional services, although some specialise in certain verticals (ie accounting, or animation).

Location

Business process outsourcing typically operates form developing nations such as the Philippines, India, and Colombia. They typically have cheaper cost-of-living and bigger populations. Different locations offer different advantages.

Size of BPO

The bigger BPOs employ more than 250,000 people. They are huge, global operations. Medium-sized BPOs range from 500-5,000 staff and offer a full range of services. The smaller BPOs might have 1-500 people.

Functions of business process outsourcing

Collectively, business process outsourcing provides any kind of staffing solution. Common functions of BPO include:

Finance and accounting: operational, technical and specialist functions Healthcare: various functions of the backend of the healthcare and health-insurance industries Creative and content: everything from post-production of Hollywood movies to newspaper and website content Tech, IT and development: network management, web and app development and maintenance Sales & customer support: ongoing sales and customer operational support and delivery Marketing: ongoing marketing, communication and branding activities Talent and HR: externalising the management of company HR, recruitment and compliance Administration: general business administration and operational activities Top BPO companies in the world's top outsourcing hubs

A wide range of BPO companies in different parts of the world provide utmost services to their Western and local clients. Many of them have even earned awards and recognitions by award-giving bodies due to their performance on both the roles they take and on their way of taking care of the employees.

Check out the top BPO companies in several outsourcing destinations below:

Top BPO companies in the Philippines Top Indian BPO companies Top South African BPO companies Business Process Outsourcing (BPO) services

Outsource Accelerator is the most trusted source for independent information & advisory for Business Process Outsourcing (BPO). We have over 4,000 articles, 200+ podcast episodes, and a comprehensive directory with 700+ BPOs… all designed to make it easier for clients to learn about, and engage with, business process outsourcing.

What is Customer Life-Cycle Management?

What is Customer Life-Cycle Management?

Customer life-cycle management (CLM) is the measurement of progression, or lifecycle of a customer’s journey when interacting with your brand – from signing up for a free trial, to making purchases, and being a repeat customer or termination of customer relationship. The process consists of multiple stages including awareness, consideration, purchasing, usage, satisfaction, retention, and customer loyalty.

Every team plays a part in a customer’s life-cycle. From cold calls or social media ads, to sales, customer service, and helpdesk, a customer’s satisfactory lifecycle with your brand or service is a collaborative effort.

 

What is Self-Service Portal?

What is a Self-Service Portal?

A self-service portal is a website or app that consists of self-help and self-service functions. This enables and empowers the customer to perform transactions, access their needed information, request services, or resolve issues quickly and conveniently without the help of a customer service agent.

Self-service web portals are easily accessible, user-friendly, and accessible via desktop or mobile devices. Self-service portals help companies save on money, time, and effort of customer service representatives.

Benefits of a self-service portal

Some benefits of using self-service portal include:

Customer service agents can save their time and effort. They can also focus on their core responsibilities; Customers will have improved knowledge of the product; Customers are taught to fix issues on their own, which makes it less likely to be an issue again; It enhances customer experience and strengthens the customer’s opinion of the company.

 

What is Telephone Answering Service?

What is a telephone answering service

A telephone answering service is a type of customer service where an agent answer calls on behalf of the business. They usually take care of client calls after office hours or when the owner is away. With this, the business can offer extensive service to their clients anytime.

A company can avail of their service at a specific time (from 6:00 AM to 12:00 MN), during office hours, or 24/7. They can also hire a telephone answering service to do other tasks such as order taking and helpdesk support.

Telephone answering service for business

Businesses of any size can use a telephone answering service to their advantage. Travel agencies, clinics, restaurants, and law firms use this to assist clients with on-demand needs and inquiries. Credit card companies put up a helpline for concerns such as stolen cards, fraudulent activities, and balances.

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About OA

Outsource Accelerator is the trusted source of independent information, advisory and expert implementation of Business Process Outsourcing (BPO)

The #1 outsourcing authority

Outsource Accelerator offers the world’s leading aggregator marketplace for outsourcing. It specifically provides the conduit between Philippines outsourcing suppliers and the businesses – clients – across the globe.

The Outsource Accelerator website has over 5,000 articles, 350+ podcast episodes, and a comprehensive directory with 900+ BPO companies… all designed to make it easier for clients to learn about – and engage with – outsourcing.

About Derek Gallimore

Derek Gallimore has been in business for 20 years, outsourcing for over eight years, and has been living in Manila (the heart of global outsourcing) since 2014. Derek is the founder and CEO of Outsource Accelerator, and is regarded as a leading expert on all things outsourcing.