Report on Customer Value Management in Homebase Firm
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Added on 2020-06-05
Report on Customer Value Management in Homebase Firm
Added on 2020-06-05
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Customer ValueManagement
Table of ContentsINTRODUCTION...........................................................................................................................1TASK1.............................................................................................................................................1P1 Components that enable calculation and determination of buyer's lifetime value ...............1P2 Benefits of Customer Lifetime Value....................................................................................3P3 Factors that affect customer lifetime value............................................................................5TASK 2............................................................................................................................................7P4 Types of Market Segmentation Strategies applied to customer base....................................7P5 B2B and B2C models of decision making and opportunities value creation can be applied9TASK 3..........................................................................................................................................10P6 Different techniques and methods can apply to increase customer relationship and loyalty...................................................................................................................................................10CONCLUSION..............................................................................................................................12REFERENCES..............................................................................................................................13
INTRODUCTIONCustomer's value management is a activity of analysis firm's client's view related toproduct and services that perceived value for money paid relative to their competitors buyers. Ithelps to accurately determine driving value of good for consumers and firm are measure rivalperformance and they align efforts, focus on available resources and create sustainablecompetitive advantage in current market place. In this report Homebase firm are selected in orderto analysis customer's value. It is a British house improvement retail organisation. Homebase isestablished in the year of 1979 as Sainsbury holding firm. It run their business activities at globallevel with almost 255 store internationally but 214 retailer store are located in United Kingdomitself (Ascarza and et. al., 2016). They have sell diy tools, paints, outdoor living, kitchens,bathrooms, décor, gardening and many more with almost £1.4679 billion revenue in the year of2013-14. In this assignment covers various components that enable of firm to calculatecustomer's lifetime value and benefits of clients lifeline values. It also covers influencing factorsand types of market segmentation strategies. TASK1P1 Components that enable calculation and determination of buyer's lifetime valueManagement of Homebase used customer's lifetime value which are forecasting the valueof business in long period of time. Through this, they are able to develop strategies and plan inorder to enhance buyers satisfaction as well as profitability. No one know about how long firm'srelationship with their clients may established. In order to know values management need tocalculate CLV that may explain periodic value which helps to established relationship betweenfirm and buyers (Chacour and Ulaga, 2015). For example, enterprises have establishedrelationship for 12 months and value of this period is £abd. There are various kind of factorswhich able to affecting CLV. Some elements of CLV are explain as follows:Present Value: Present value is a amount that are ready to pay customers in order topurchase product in current business environment. It is a rate of repetition of purchasingby potential clients. This factors are calculating by using time value of money as clientslifeline value is periodic cost which are depend on buyers retention for an organisationin long period of time. 1
Customer Loyalty: Customer loyalty in important element for firm that are helps toforecast sales unit as well as profitability. CLV is relies on individuals loyalty because ithelp to explain retention period with company product and services in long period oftime in an effective ways (Kotler, 2017). For example, if buyer are loyal towardorganisation and its commodities then they are connected with them in long period andif they can not satisfy enterprise goods then company provide high quality of services tothem in order to gain higher satisfaction. If they fail to do so then clients can notpurchase their product in next time. High loyalty factors mean more profits if less thenit affect organisation performance negatively. Mathematical Formula: In order to know customer lifeline value then managementused numerical formula which helps to draw effective outcome in limited period oftime. This mathematical expression provide more accurate value which helps to takedecision related to product quality and services delivery method (Di Benedetto andKim, 2016). It include various elements like total revenue, number of buyers and manymore. For example, its calculated as total revenue / number of months where clients arejoined their organisation. This method provide information related to profitability aswell as individuals satisfaction form long period (Kumar and Reinartz, 2018). Averagevalue of customer's lifeline helps management to take right decision related to run wholebusiness activities in accurate manner. There are mathematical formula of CLV areexplain: CLV = ((T x AOV)AGM)ALTHere; AOV = Average Order ValueT = Average Monthly transactionsALT = Average customer LifespanIn Detail: Here; R = Monthly Retention Rate D = monthly Discount Rate2
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