Companies Are Secretly Scoring You To Determine How They Treat You

Customer lifetime value or clv score
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Did you know that companies keep a secret score on you to determine how important you are to them? According to The Wall Street Journal, this score is called a customer lifetime value, or CLV score.

What is the customer lifetime value score?

According to the WSJ, the CLV score helps a company determine the ads it will target you with, the perks or promotions you get, and even the prices you pay for products or services.

For instance, suppose two people call customer care at the same time to talk about the same topic. One is made to wait longer before the representative gets on the line, while the other gets the representative within seconds. This partiality could be due to the difference in their customer lifetime value.

A CLV score is reportedly kept by all types of companies, including airlines, auto dealers, wireless carriers, banks and credit card companies. An airline could use a CLV score to determine the odds of selling a seat upgrade, while a credit card company may use the score to decide the perks you are offered.

Even though there hasn’t been much talk about shoppers’ customer lifetime value previously, according to the WSJ, anyone with a bank account, smartphone or online shopping account has at least one CLV score. It can be described as a sort of secret credit score, with the difference being that you won’t be able to check your CLV score.

The WSJ even compared the CLV score to the golden method that shopkeepers have been using for decades to judge a customer, like by using a customer’s appearance or behavior to decide if they are worth paying attention to or not.

How is the CLV score calculated?

According to the WSJ, hundreds of analytics firms are involved in calculating these scores for their clients. All these firms have their own way of calculating customer lifetime value, and they keep it a secret.

A CLV score may be based on a number of factors. For example, a simple way to calculate customer lifetime value is to analyze customer spending. Other factors which can be used include demographic information such as age, zip code, marital status, and details on social media profiles or even behavior like the number of items returned by a customer.

If you are a reliable and repeat customer who doesn’t need to be enticed by a discount coupon, then you’ll probably get a high CLV score. If you occasionally buy, make too many complaints to customer care, and often return products, you are likely to get a poor score.

“Many (companies) say the scores make them more comfortable offering costly services and products in the short term because they are confident they will pick up more business in the long term,” the WSJ report notes. “Some say they aim to increase each customer’s lifetime value by encouraging repeat business.

A few mobile carriers admitted to the WSJ that CLV is used to decide the offers you get, including free phones and other perks. Further, these carriers said the factors they used to calculate customer lifetime value is the number of times a customer calls the service center and if the customer has browsed a competitor’s website.

What about user privacy?

A CLV score is again an example of how companies play with user data to generate more revenue. User data is one of the most important inputs and thus, it is valuable as well. This is the reason hackers are always on the lookout for such data. Recently, Under Armour revealed that 4 million Australian accounts on its MyFitnessPal app were affected in the February 2018 data breach.

Pam Dixon, executive director of the World Privacy Forum, told the WSJ that more information on CLV scores are needed because such scores have the potential to tag anyone as cheap or a fraud, which may not be even true.

While there is nothing you can do currently about how companies score you secretly, at least you know such a score might exist. Additionally, if a customer care representative makes you wait a bit longer the next time you call in to customer service, you can take a chance by asking if it’s because of your CLV score.

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