Customer Value Management Assignment Sample

Customer Value Management

Table of Contents
INTRODUCTION...........................................................................................................................1
Task 1...............................................................................................................................................1
P 1 Various components of an organization to determine and calculate a customer's lifetime
value............................................................................................................................................1
P 2 Benefits of customer lifetime value to an organization........................................................2
P 3 Factors that influence the customer lifetime value...............................................................4
Task 2...............................................................................................................................................5
P 4 Types of market segmentation strategies that can be applied to a customer base................5
P 5 Evaluate B2C and B2B decision – making models and demonstrate it................................6
Task 3...............................................................................................................................................7
P 6 Different techniques and methods organization to encourage customer relationships and
customers loyalty........................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES ...............................................................................................................................9

INTRODUCTION
Customer Value Management is a measurement of a company's customer's point of view
of the sensed value for money delivered relative to that of their rival's customer's, and it is also
called Customer Value Added (CVA). The developing marketing and management strategies is a
result of growing customer relationship management, large firms are investing to gather large
customer database to understand, monitor and influence customer behaviour (Blocker and et. al.,
2011). One critical factor of CRM is customer value, the economic value relationship which they
give to the firm, its major focus on the analysis of the individual data on potential customers, the
final information is used to acquire and retain customers and to drive customer behaviour
according to the marketing strategies, that optimize the current and future customer value. As
stated in case study, Homebase is a British retailer which offers home improvement accessories
and garden centre. It is founded by Sainsbury's in 1979. According to the given case study, it
adopted a SMS communication broadcasting campaign, that resulted in increasing sales with
20% AND 26.5% from both email and SMS both.
Task 1
P 1 Various components of an organization to determine and calculate a customer's lifetime
value
There are various components that every organization have, that are essential to run a
firm to get success, and every element is unique itself and plays an important role, Homebase
also has ultimate components, such as -
Sales force automation – Sales force automation is one of that factor that undertakes the
maximum business organizations and essential for customer relationship management. It
includes forecasting, recording sales processing and keeping a track of the potential interactions
as well (Doligalski, 2014). It aid to know the opportunities which can generate better revenues
that makes it very significant. There are some major elements are also considered within it, that
are known as Lead Management, Account Management, Opportunity Management, Forecasting,
Pipeline Analysis, Contact Management, Activity Management, Email Management and
Reporting
Lead management – As the name indicates, lead management refers to maintain track of
sales and distribution leads. The CRM is lead by the sales industries, marketing firms, and
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customer executive centres that benefited business. It involves the campaigns, designing
customized forms, finalizing mailing lists and several other elements.
Customer service – Customer service provides the data of customers that includes
purchasing information of customers, their patterns and potential departments from which they
buys the stuff.
Marketing – In Homebase marketing is one of the most significant components of
Customer Relationship Management, because it used to promote the goods and services in order
to increase the profit and influence customers, that aid to improve the strategies to used in
marketing and promotions (Flint and Woodruff, 2014).
There are some other components involved in CRM like workflow automation, business
reporting and analytics these all prudent to impact on CRM data, that drives the success of the
business.
Calculation of Customer Lifetime Value - There are several different ways to
calculate the CLV (Customer Lifetime Value), measuring CLV needs to looking at the length of
the customer's life span, retention rate, customer churn rate, and average profit margins per
customer (Flint, Blocker and Boutin Jr, 2011). There are two different formulas that calculates
the CLV according to the traditional and simple formulas. Here simple formula included in this,
that is as follows -
Simple CLV formula : The most basic way to determine CLV is to add up the revenue
earned for the customer (annual revenue multiplied by the average customer lifespan) minus
initial cost of acquiring them.
For example, Homebase generates $ 3000 each year per customer with an average
customer lifetime of 10 years and $5000 as customer acquiring cost, the the CLV will be
calculated as -
= (Annual revenue per customer * Customer relationship in years) – Customer
acquisition cost
hence, $3000 * 10 - $5000 = $25000
P 2 Benefits of customer lifetime value to an organization
Nowadays, many large companies adopting the Customer Value Management that
provides a exact calculations through Customer Lifetime Value, that refers to the profit amount
from that a firm earns from a consumer as they purchases the products and services from
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