Customer Lifetime Value (CLV)

Tesco is the leading retailer in the United Kingdom that has also been operating in 12 markets across the

world. Over the years, Tesco has diversified its business from grocery retailing to electronics, financial

services and clothing. Tesco has a huge customer base and largest market share in the United Kingdom.

Customer life value of Tesco has been estimated in the below chart:

From above estimation, profit per customer has been analyzed. In the following chart, the profit per

customer and present value of customers has been plotted.

It can be noted that profit per customer has increased in the first year and them became constant over

the next years. On the other hand, the expected present value has gradually declined in the next years.

Customer life value has been effective and advantageous for the organizations in multiple ways. The one

prominent advantage of customer life value for Tesco is that it determines the level of investment of

company in the marketing activities. The second important advantage of Customer life value is that

management can monitor the impact of marketing strategies on the value of customer assets. The

management of Tesco will be able to analyse that whether customers have been retained and delivered

value to company or not over the years.