Customer Value Management Assignment

Added on - 06 Jun 2020

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Customer Value Management
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1 Components that enable determination & calculation of customer's lifetime value..............1P2 Benefits of Customer Lifetime Value....................................................................................2P3 Factors that affect customer lifetime value............................................................................4TASK 2............................................................................................................................................5P4 Types of Market Segmentation Strategies applied to customer base....................................5P5 B2B and B2C models of decision making and opportunities value creation can be applied6TASK 3............................................................................................................................................8P6 Different techniques and methods can apply to increase customer relationship and loyalty8CONCLUSION................................................................................................................................9REFERENCES..............................................................................................................................10
INTRODUCTIONCustomers are the ultimate god of business whom consideration need to include bybusiness managers in their working so that appropriate gain become possible. It is essential tovalue all provided feedback of clients so that effective management of problems could be done(Verhoef and Lemon, 2015). This project is based on customer value management byconsidering an example of Homebase. In this project, business need to evaluate the customerlifetime value and its components so that better and effective working could be promoted in asuitable and appropriate manner. Along with this, management need to determine benefits oflifetime value as well so that suitable gain become possible with considerable factors as wellwhich impacted lifetime value as well. All these things need to evaluate by using B2B and B2Cmodels as well so that appropriate decision making become possible in order to grab betterassociated results. All these consideration will need to underpin by analysing customer valuemanagement.TASK 1P1 Components that enable determination & calculation of customer's lifetime valueCustomer's lifetime value is an essential method which is using by Homebase. It helps inforecasting so that they will be able to develop an effective relations with their customers. As aresult, they will be able to maintain long term relationship with them(Goetschand Davis, 2014).For above stated aim, organisation will calculate CLV as it aids them to determine periodicalvalue among firm as well as service users. There are some factors which will include to identifyCLV and these are stated as beneath:Present value:It is rate which is associated with repetitive buying nature of customers.PV is considered as a discounted rate related to cash flow which is developed through existingclient base. It will be found out with assistance of TVM (time value of money) because CLV is aconnected with periodical value which is highly depend on retention of customer.Customer Loyalty:If clients are much loyal for an association then, this will aid into theirlong term retention; for this, they will take support of CLV. Rather than this, if they are notsatisfied with products and services of an enterprise then, they will never want to go there again.Hence, it has been understood that loyalty of people will cater advantages to company, but ifthere is lack of loyalty then, it will affect their production and profits(Chacour and Ulaga, 2015).1
Mathematical formula:Many professionals are using formula so that they will determineCLV. With aid of this, adequate value will be found out which support manager to intojudgement making procedure. Formula will comprise many components, such as customer'snumber, profits.Formula:Total profit/ number of months since client joinedThrough this, average revenue will be identified which is developed through purchaser. Someother formula will also be utilized:CLV:((T*AOV) AGM) ALThere, T: Average monthly transactionsAOV: average order valueALT: average customer lifetime (in months)Details:Here, R: Monthly retention rateD: Monthly discount rateCohort analysis:It is a team examination of individuals who are sharing similar type ofcharacteristics. People who include into this sector are evaluated in same manner. Majorbenefit of using this tool is that this consumes less time and a single person can beexamined in similar time. Additional, deviations will be much common which willprovide impact to CLV(Kerznerand Kerzner, 2017).Individualized CLV:If company wants to acquire accurate measure then, this methodwill be used by them; because it concentrates on each person's behaviour as well asattitude. For this, an enterprise will use both kind of data, i.e. past and present. With helpof this, manager will formulate an effective presentation.P2 Benefits of Customer Lifetime ValueIn modern era, there are many companies who are paying lots of attention todetermination of CLV. When examination is done and firm acquires positive outcome thenusefulness of this factor will easily understand by them and after that they use this technique intooperational exercise. As a result, reputation, market share and in addition profits of firm easily2
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