Customer Value and Management - Assignment
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Added on 2020-06-05
Customer Value and Management - Assignment
Added on 2020-06-05
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CUSTOMER VALUEAND MANAGEMENT
INTRODUCTION .....................................................................................................................................4TASK 1....................................................................................................................................................4P1 Various components which calculates customer’s lifetime value ................................................4P2 Benefits of CLV for an organisation ..............................................................................................6P3 Factors that can influence customers’ lifetime value ...................................................................7TASK 2....................................................................................................................................................8P4 Types of marketing segmentation strategies ...............................................................................8P5 Evaluate B2B and B2C decision making models ...........................................................................9TASK 3..................................................................................................................................................11P6 Tools and techniques to increase customer’s relationship and loyalty .....................................11CONCLUSION ......................................................................................................................................12REFERENCES ........................................................................................................................................13
INTRODUCTION In this competitive era, it is essential for business entities to attain and retaincustomers by providing them qualitative products and services. Regarding this, managementalso have to create value for their customers for raising their experience. It builds effectiverelationship with customers where they continuously purchase wide range of products andservices (Verhoef and Lemon, 2013). The present assignment is based on Homebase; it’s aBritish home improvement tratilers. Last year, the firm has launched broadcast campaignSMS communication in order to make direct promotion. Through which, overall sales of thecompany driven up by 26.5%. the report aims is to defines different that helps in evaluatingcustomers ’lifetime value; it aids organisations to accomplish their goals and objectives.Readers will also come to know about factors which can hinder customers’ interest and valuein direct and indirect manner. There will a discussion on types of market segmentationsstrategies which can be applied on customer base. In addition, B2B and B2C methods will bealso defined later. TASK 1P1 Various components which calculates customer’s lifetime value In business units where products and marketing promotion channels are transitory,companies are tend to raise customers’ relationship. It plays an imperative role in driven uporganisational profits and sales revenues. SMS communication has experienced to maximiseits profits primarily when the consumer makes supplementary consumptions therebyoffsetting the acquisition cost. Along with this, loyal customers are liable for generating valuefor the company but sometimes they are scare in nature due to changes in market trends (FlintBlocker and Boutin Jr, 2011). In this manner, administration should formulate variousstrategies and linked it with company’s goals and objectives. For example- implementationof product centric to customer oriented marketing. Thus a set of best practices is accessible inemerging and increasing customers’ life time values. Furthermore, in terms of marketing customer lifetime value is seemed as a forecastingof actual profit endorsed in order to identify the entire future relationship with customers. Thecore concept of CLV also encourages corporations to move their attention from short termwins to long term relationship with target audiences. It also represents maximum limit ofspending so as to attain new customers from market. The prime motive of CLV metric is toexamine the financial value of each customer and it is totally differ fromcustomer
profitability, in that CP deals with past whereas CLV looks forward. Therefore, CLV toolshapes managers’ decisions and it is quite hard to enumerate. Along with this, CLV can beapplied on present value of cash flows which will endorse to customer relationship formeasuring the single lump sum value of future cash flows. Below describe the steps ofcalculating customers’ lifetime value: -Prediction of enduring customer lifetime Forecasting of upcoming sales revenues, i.e. year-by-year. It is based on an overallestimation of future purchasing of products and price is going to be paid for that.assessment of costs for carrying those productsCalculation of the net present value of these future amounts. Formula of CLV: - CMi = RVi – VCi. Where:Rvi = Customer revenueVci = Customer variable cost. There is defined several elements which are getting involved in customer lifetime value,such are stated as under: - Churn rate – It consists with specific amount of customers who has end theirrelationship with the firm. Basically, churn rate constantly across the life ofrelationship with buyers (Jung Choo and et. al., 2012). Discount rate – Discounting always ignored while calculating lifetime customers’value. Sometimes, current interest rate is used as a proxy for discount rate. Retention cost– the cost includes customers support, promotional incentives, billingetc. Retention cost is the amount that has to be invested in attaining and retainingcurrent buyers of the company.
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