Customer Lifetime Value and Business Decision-Making

The assignment discusses the importance of designing systems according to market situations and delivering appropriate products and services based on customer needs and wants. It highlights the need for management to acknowledge different elements to have accurate and complete information about customer lifetime value, anticipate benefits of CLV, and consider various factors such as enterprise size, professional needs, and market challenges. The document also touches on segmentation techniques used by firms to enhance customer bases, B2B and B2C decision-making models, and communication methods like internet, email, SMS, and telephone to construct relationships with customers.

Customer Value
Management

Table of Contents
Customer Value Management ....................................................................................................1
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Various components to determine and calculate customer's lifetime value..........................1
P2 Benefits of customer lifetime value to an organisation.........................................................3
P3 Factors that influence the customer lifetime value................................................................4
TASK 2............................................................................................................................................6
P4 Types of market segmentation which can be applied to customer base................................6
P5 B2B and B2C decision making models and opportunities for customer value creation.......7
TASK 3............................................................................................................................................8
P6 Different techniques and methods to increase customer relationship and loyalty.................8
CONCLUSION ...............................................................................................................................9

INTRODUCTION
Customer value is concept which defines that executive require to use appropriate
methods and techniques to examine and measure opinions and views of clients. Management
require to have skilled and competent members which help organisation deliver quality items and
services in market in according to needs and wants of people. This helps superior to construct
competitive advantage and position firm higher than rival brands. Present report is based on
Homebase which is popular retail store established in United Kingdom. It is a retail store which
provide different variety of items that is kitchen, bathroom, gardening, outdoor living, DIY tools,
paint and décor. This assignment specifies information about different components that are used
by management to ascertain CLV (Hammer, 2015). Apart from this, superiors even require to
acknowledge benefits of customer value management concept and factors that might impact on
system functionality. There are various types of market segmentation used by superiors to
enhance customer base. Along this, various methods and techniques are used by seniors to
establish relations with clients and make them loyal.
TASK 1
P1 Various components to determine and calculate customer's lifetime value
Management construct relations with clients which help companies to enhance market
position and generate adequate profit from business. It is essential that superior have adequate
funds, material and manpower which help firm deliver appropriate items and services in market.
Administration even need to implement adequate tools and techniques in system which help
them to provide things in according to needs and wants of people (Hollensen, S., 2015). Along
this, training and development programs that is sessions, meeting and conferences are executed
by superiors to enhance skills and abilities of members; thereby make them perform activities
effectively. This benefits Homebase to enhance market position and reputation by providing
quality products to consumers. This advantage firm to satisfy buyers and construct customer
loyal towards firm. Thus, these are various elements that are considered by management to build
consumer's value for lifetime are defined beneath:
Cohort analysis: It is one of element which determine that administration require to have
appropriate information about needs and wants of people. They need to acknowledge group of
individuals which have similar characteristics, features and traits. This help manager of
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Homebase to have complete data about various market situations and their influence on customer
lifetime value. Hence, it is necessary that company develop and maintain good relationship with
clients by providing them quality things and in respect to their demands.
Personalised CLV: This tactic define that management use various mathematical
formulas and expressions to have information about customer lifetime value. Homebase which is
retail firm require to implement adequate tools and techniques in system which benefit superiors
deliver items and services in according to demands and requirements of people.
Present Value: This component determine that administration require to have accurate
and complete information about buyers point of view in respect to items and services. It is
essential that firms acknowledge discounted value and present cash flows that are ascertained by
Homebase from customers. This help company to acquire data about time value of money which
help management to retain clients for longer period.
Customer Loyalty: It is another element which determine customer lifetime value
benefits on organisation. Management responsibility is to use adequate tools and techniques in
system which help them to deliver quality items and services to people. Homebase have buyers
which are loyal towards firm which advantage executive to enhance market image and reputation
(Kerzner and Kerzner, 2017) This also helps company to position higher than rivals by
establishing competitive advantage.
Customer service: This is component which define that after sales service is provided by
Homebase to satisfy people. This benefits company to enhance market position and construct
consumers loyal towards firm.
Sales promotion: Coupons, rebate, discounts, offers are various tools that are provided
by management of Homebase to retain customers for longer time and give them alternative to
visit store again and again.
Mathematical formula: Administration require to use appropriate quantitative tools to
get appropriate information about customer's life time value. It is necessary that adequate
numerical formulas and mathematical expressions are used by manager of Homebase. This help
them to have complete information about profitability of firm; thereby make adequate decisions
and select alternatives which are beneficial for company. Firm has finance department whose
duties is to record expenses and income to acknowledge amount of funds available in respect to
organise business operations effectively. For example, Company have 200 customers which help
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management to generate 20000 Pound as profit. Customer lifetime value is calculated by formula
which is dividing total number of consumers by total revenue that is 200/20000 which is equal to
0.002. This helps seniors to acknowledge customer's satisfaction and and profitability of firm.
Thus, management make adequate decisions and conduct business operations effectively. CLV
mathematical formula is defined below:
CLV = ((T x AOV)AGM)ALT
(AOV: Average Order Value; T = Average Every month transaction; ALT = Average clients
Life duration)
(R:Monthly Retention Rate; D: Monthly Discount Rate
P2 Benefits of customer lifetime value to an organisation
CLV is appropriate concept which is used by management to use adequate methods, tools
and techniques that are used by firms to deliver appropriate items and services in market. It is
necessary that quality things are provided to buyers which help Homebase to enhance reputation
of company. Along this, administration even require to have effective and strong customer base
which benefits enterprise to generate adequate amount of revenue from business.
Therefore, these are various advantages that CLV have on improving system
functionality are defined below:
Financial growth: This is main characteristic and benefit of customer lifetime value
concept application have on improving revenue of organisation. Executive responsibility is to
implement adequacy tools and techniques in system which help them to use material and
manpower in efficient manner (Kim and et. al., 2015). Homebase is a retail store which provide
kitchen items, paint and décor, bathrooms and gardening products. This benefit company to have
large customer base which help management generate adequate profit from business. Thus, firm
have adequate amount of capital to conduct business activities in according to market conditions.
Increasing reputation of company in market: Executive responsibility is to use
appropriate technologies and techniques which help superiors deliver creative and innovative
things to people. Customers requirement is to get products in respect to their demands and
quality things. This benefits Homebase to attract people by enhancing reputation and image of
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firm in market. Along this, manager is also able to establish competitive advantage which help
them to position company higher than rival brands; thereby increase revenue capabilities.
Assist in retaining buyers: Management establish relations with consumers by providing
them appropriate items and services in respect to their needs and wants. Along this, various
benefits such as after sales service, voucher, offers and rebate are provided by firm to sustain
customers for longer period. CLV is appropriate technique used by administration to anticipate
importance of loyal customers to compete with rival firms and to have adequate customer base.
Enhance profits and ensure maturation of organisation: This component specifies that
executive need to implement appropriate tools and techniques in system which help organisation
deliver quality items and services in market. This benefit administration to attract large number
of people; thereby gain adequate amount of revenue from business. Customers want to get
quality things and products in according to their demands (Kotler, 2015). This helps manager to
sustain their market position and survive in market for longer time.
Thus, customer lifetime value helps management to acknowledge its advantage on system
functionality and profitability. Homebase provide appropriate varieties of items in respect to
needs and wants of people. This help company to have large customer base which benefits
executive to enhance profitability. Along this, quality things are provided by firm which give
benefits to administration to satisfy clients and retain them for longer period.
P3 Factors that influence the customer lifetime value
CLV is concept which helps top personnels to use appropriate techniques and tools in
system which help them attain goals and objectives timely. It is essential that adequate items and
services are delivered by Hombase in respect to needs and wants of people. Organisation exist in
market which is dynamic and keeps on changing with time; so it is essential that appropriate
modification and transformations are made by management to make system function effectively.
This help company to satisfy consumers by providing them quality things; thereby make them
loyal towards firm. Customer lifetime value is tactic which benefits management of Homebase to
retain clients for longer period. These are various factors that directly or indirectly impacts on
enhancing market position and reputation are stated as follows:
Size of enterprise: This is one of element which define that small, medium and large are
various forms of organisation which differs with each other in respect to scope, structure,
objective and amount of capital. Customers are valuable asset for every firm, as management
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need to have adequate number of buyers to purchase things in respect to fulfil their demands.
Homebase which is large scale retail store have large customer base which helps firm to increase
profitability. But this makes difficult for superiors to measure CLV and asses information about
number of loyal clients company has in respect to enhance market reputation.
Online and offline channels: Organisation require to use appropriate networks to
distribute items to domestic and international market. It is essential that adequate tools and
techniques are implemented in system which help management deliver quality products and
services to customers. Along this, administration even need to provide skills and abilities to staff
members in respect to their skills an abilities. This advantage Homebase to deliver appropriate
items to people in respect to their demands.
Need of professionals: This factor determine that administration of Homebase require to
have skilled and competent members; so that appropriate business activities are executed in
respect to market conditions. Company will be able to enhance market position and image if they
provide quality things to customers. For this, management even require to implement latest tools
and techniques in system (Kotler, 2017). This determine that superiors responsibility is to
conduct training and development programs such as sessions and seminars to enhance skills and
abilities of members; thereby make them skilled and competent to perform tasks effectively. This
invests large amount of capital and efforts of seniors which increase their burden.
Lower participation in product categories: This component define that if CLV is
measured wrongly than management may not have appropriate information about organisation
market image and reputation. Along this, executive will not able to assess about variety of items
and services required to be provided by Homebase in respect to needs and wants of people. Thus,
if superiors don't have skilled workforce than it will influence on quality of items and on
goodwill of firm.
Challenging to measure: Management need to have support and assistance from
professional and experts to analyse customer lifetime value. CLV has complex formulas and
mathematical expressions which makes it difficult for superior to have complete information
about number of loyal clients Homebase have in respect to rival firms. If member which don't
have adequate skills and abilities in respect to financial terminologies. This influence on form of
measurements that are done by seniors to have complete awareness about market position and
image.
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TASK 2
P4 Types of market segmentation which can be applied to customer base
Market segmentation is defined as process executed by management to divide market and
customers into small groups. Age, interest, features, characteristics and level of standard are
various tactics that are used by superiors to formulate people into specific segments. Homebase
which is retail store have different variety of items that is kitchen, paint, décor and so on in
respect to provide things to consumers in respect to their demands. STP is appropriate technique
used by seniors to target people and use adequate promotional techniques such as online
advertising, social media, sales promotion and publicity to inform public about items and
services.
Segmentation: This is defined as starting stage of STP which includes activities
conducted by superiors to acknowledge different kinds of people that are present in market.
Homebase which is retail store require to provide kitchen, bathroom, gardening, paint and décor
in respect to different forms of consumers (Kumar and Reinartz, 2016).
Targeting: This is second step which define that management require to design items and
services in according to needs and wants of people. It is essential that Homebase is able to
inform appropriate consumers which have potentiality and demand in respect to products of firm.
Positioning: It is last phase which specifies that appropriate promotional techniques are
used by management to attract customers by informing them about variety of products that are
provided by Homebase. These are various types of positioning that are used Homebase to have
adequate customer base are defined beneath: Psycho graphic: This tactic define that management provide items to people in respect to
lifestyle, hobby and involvement. Consumers prefer to purchase things again if they get
quality things and branded items. Attitude, attribute, position are various elements that
are used by superiors to provide adequate things and attract people. Geographic: Homebase have branches in different nations which define that management
have large customer base. Internet is best tool that is used by superiors to inform public
about items and provide quality services to people.
 Demographic: This is form of segmentation which define that organisation provide
variety of products in respect to age, gender, caste and religion of people. These are
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various tactics that are used by management to design system and use appropriate tools
and techniques which help firm deliver things in respect to needs and wants of people.
P5 B2B and B2C decision making models and opportunities for customer value creation
In firm, manager require to identify all components and factors that effect operations and
resulted in decline of overall performance. So enterprise decision depend on type on business
unit whether it is B2B and B2C. In order to increase efficiency and effectiveness, it is very
compulsory for Homebase management they are taking efforts so that take right decision in an
effective manner. There are several type of different model are available into market place
related to decision-making process and its utilization in B2C as well as B2B. It can be analysis
are as follows:
Decision making models B2C B2B
Rational or classical model of
decision making:
Rational as well as classical
model of decision-making has
very effective method. In this,
management has take decision
related product development
which are associated with to
consumers needs, preferences,
attitude, perception,
behavioural and many more.
They are easily identify issues
and problem those affected
quality of goods. This method
is very use full for small scale
organisation because it is
shows appropriate aim as well
as objectives in significant
manner (Pearson, 2016).
It consist enterprise execution
of all business function and
operations. There are various
kind of different factors of
judgement developing
process, this all are includes in
it. A part from this, classical
model has apply in big
organisation.
Administration or bounded
rationality model
Bounded and administration
rationality model are
B2B selling is a techniques or
method that are used by
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addressing target customers in
order to achieve goals that
improve organisation
performance at market place.
All option can be identify by
decision maker for take right
judgement at right time.
management people or higher
authority in order to gain high
market share. There are several
places to sales B2B product.
Retrospective decision making
model
In this method of decision-
making process, company has
work in production sector
which are increase value of
product. Through this
activities, firm are capable to
attract large number of clients
toward their goods and
services thus enhance
customer's satisfaction in long
run.
Under this, management of the
firm has communicate all
relevant information to
employees about aim and
objectives accordingly they are
work together in order to
achieve goals and objectives in
limited period of time.
TASK 3
P6 Different techniques and methods to increase customer relationship and loyalty
In organisation, management responsibility is to take appropriate decisions in respect to
working strategies, planing, procedure and many more. Through this, each one employees has
know what is there role in with in work place so that all worked together in order to achieve
common goals and objectives in limited period of time effectively. In big organisation, board of
director has take decision those are major and same administration has also take decision but as
compare to director these are minor in their nature (Rihova and et. al., 2015). Management of
Homebase require to use various methods and techniques to construct relations with customers.
It is necessary that quality items and services are delivered by firm which benefit firm to satisfy
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customers and make them loyal towards company. Thus, these are various tools that are used by
executive are stated below: Emails: This is efficient technique that is used by superiors to keep customers connected
by firm. Homebase which is retail store have different items such as kitchen, bathroom,
gardening, paint and décor; so it is essential that people have information about packages
and prices that are determined by seniors to attract consumers. SMS: This is tactic used by management of Homebase to send information about various
offers, discounts, rebate and coupons that are timely provided by firm to attract people.
This helps company to retain buyers for longer period by timely giving them information
about items and its prices. Telephone: It is another tool used by Homebase to connect customers by interacting with
them and taking feedback about items and services (Schwepker and Schultz, 2015).
 Internet: Online marketing is appropriate technique used by management of Homebase
to increase customer base by informing them about items and services. Company
websites are formulated by superiors which have complete data about products and its
prices.
CONCLUSION
As per above report, it can be comprehended that executive of every organisation require
to design system in according to market situations. It is essential that appropriate items and
services are delivered by firm in respect to needs and wants of people. Management require to
acknowledge different elements to have accurate and complete information about customer
lifetime value. Along this, they even need to anticipate benefits of CLV and impacts of various
factors such as size of enterprise, need of professionals and challenges which exist in market.
Superiors of enterprise have different types of segmentation which are used by them to enhance
customer base. B2B and B2C decision-making models are used by manager to make select
appropriate alternatives and formulate adequate policies and objectives. Therefore, internet, e-
mail, SMS and telephone are various techniques that are used by firms to construct relations with
customers and make them loyal towards company.
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REFERENCES
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