Customer Value Management | Assignment

CUSTOMER VALUE
MANAGEMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Components that enable an corporation to determine & calculate customer's lifetime value
................................................................................................................................................1
P2. Benefits of customer lifetime value to an enterprise........................................................2
P3. Factors influencing the customer lifetime value..............................................................3
TASK 2............................................................................................................................................4
P4 Type of market segmentation that can be applied to a customer base..............................4
P5 B2C and B2B decision making models.............................................................................5
TASK 3............................................................................................................................................7
P6 Various techniques and methods to enhance customer loyalty and relationships.............7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Customer value management refers as an approach through which managers of a firm can
manages business market in a proper way. This concept includes two basic objectives i.e. deliver
effective value of products to customers and get high return on investment. For achievement of
this, marketing department of a firm uses various strategies and techniques in order to identify
demands of customers, situation of marketplace, behaviour of people etc. All these things help in
improving sales performance of an association. For determining the importance of CVM in a
company, a report has been prepared on a TESCO marketplace (Hollensen, 2015). It is an
international firm of UK which operates business in various countries. This firm is dealing in
retailing sector which serves products like home based commodities, luxury food items and
more. In order to increase large market share, this assignment has made a discussion upon
different factors present in business environment which affect customer base and profitability.
TASK 1
P1 Components that enable an corporation to determine & calculate customer's lifetime value
Customer lifetime value refers to a tool which is used in analysing perception of people
about products of a company. It forecast the value of consumers i.e. till how many days or time a
person engage with an enterprise. Through this method, managers can evaluate sales
performance of enterprise and how much they can generate revenues in future. Therefore,
management of Tesco, used to measure CVM in order to know how business of this firm goings
on in marketplace. It uses various methods in enhancing brand image of association so that
number of footsteps of people can be increased at stores. In addition to this, it gives various
offers and discounts so that people buy products in bulk and retain with long time through which
they can generate high return on investment as well as occupy large (Johnston and Marshall,
2016). In general, CLV determines a periodic value that predicts estimated value of customers’
relationship with firm’s product in 12 months which is shown as £x. Mathematical formula for
calculating CLV is:-
Calculation of CLV= (Average Order Value) x (No. of Repeat Sales) x (Average of Retention
Time)
Some major terms included in CLV which needs to be calculated are described as below:
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Present Value: It reflects customers’ perception when they used products of an enterprise
or how many people comes on daily basis in outlets of them (Kerzner and Kerzner, 2017). So, by
calculating present value of brand at marketplace, managers can measure cash flow as generated
by customers i.e. value of money in terms of time or till how many days customers will be retain
with services.
Customer Loyalty: An enterprise always wants to gain retention of loyal customers who
avail products or services for long period of time. It would them in gaining high return on
investment.
Mathematical Formula: Using mathematical formula for calculating monetary price of
CLV, managers of Tesco can depicts accurate value. To measure this accurately, they needs to
consider on some specific components like customers’ perception, duration of time i.e. how
many days a person retain with company’s commodities and total revenue generated. In
mathematical terminology it can calculated as:
CLV = (Total revenue/Number of months customer taken the services).
P2. Benefits of customer lifetime value to an enterprise
Customer Lifetime Value represents the sales performance of an enterprise as well as brand
image of it at marketplace (Kim and et. al., 2015). It derives the real position of a company in
terms of customers’ perceptions. Therefore, after measuring value of CLV, managers of a firm
can determine need of modifications in production and modes of delivery. In context with Tesco,
it manufactures high qualitative products and delivers them on affordable price rates. It has
gained ninth position in the world in retain industry due to offering best services. Currently, it
has opened various stores in near about 7 countries where more than 17,000 workers are
working. This company is famous for its innovative and creative products or services as well as
ways through which it convinces people to stay with the same.
By calculating CLV, an association can make modifications in organisational system so that
better outcomes can be obtained. In order to understand perception of people, Tesco used to
make good connection with them by using SMS and e-mail services. Through these modes of
communication, employees of this firm can interact with customers easily and inform them about
new offers and discounts (Kotler, 2015). It would help in increasing number of customers at their
stores. Some of the major advantages of CLV for all type of organisations are:
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