People Analytics For Dummies

Chapter 6

Estimating Lifetime Value

IN THIS CHAPTER

Learning why employee lifetime value (ELV) is important

Determining ELV

Applying ELV

Achieving sustained profitable business growth requires many things to go right at the same time. To name a few: differentiating products and services, the ability to profitably scale production, and the ability to attract, activate, and retain happy customers. To make matters more challenging, all this must be done in competition with other companies in a global market that never rests.

Many of these business outcomes can be measured and analyzed numerically: market share, revenue, profit, customer satisfaction, and customer retention, for example. These are the kinds of measures you find mentioned in annual reports, discussed in investor phone calls, and highlighted in balance sheets. These are the outcomes that, by definition, matter, but not all businesses are endowed with equal measure of these conditions. Given that fact, how do you cultivate these outcomes or change them?

Setting aside complicated financial manipulation for a moment, the answer is simple: Most successful executives agree that people are a company’s largest and most important ...