Customer Value Management : Assignment

Added on - 21 Jul 2020

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CUSTOMER VALUEMANAGEMENT
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1 Components that enable determination & calculation of customer's lifetime value.........1P2 Benefits of Customer Lifetime Value...............................................................................3P3 Factors that affect customer lifetime value.......................................................................4TASK 2............................................................................................................................................6P4 Types of Market Segmentation Strategies applied to customer base................................6P5 B2B and B2C models of decision making and opportunities value creation can be applied8TASK 3..........................................................................................................................................10P6 Different techniques and methods can apply to increase customer relationship and loyalty..............................................................................................................................................10CONCLUSION..............................................................................................................................12REFERENCES..............................................................................................................................13
INTRODUCTIONCustomer value management is a concept that helps in keeping record of all informationrelated to value that is persist by consumers whom are regularly and sometime visit corporationto make purchases. This is a model that is helpful in studying profitability that is linked with allcustomers of company separately, overall. In this portion, monetary values which are associatedwith clients is to be calculated(Jung Choo and et. al., 2012). Very most important reason andmethod of increasing values ofcustomers are serving them extraordinary quality goods andservices. Current report pays attention on Homebase company which is a broadcasting providercorporation and wants to make some improvements in business activities so that profit could goon hike of at least 20%. To hit this goal, firm is now focusing its weak service which is SMS.This service of organisation is in weaker position and has to get improve, in order to maintainand attain all growth goals.TASK 1P1 Components that enable determination & calculation of customer's lifetime valueHomebase company is using a current trend which is helpful in predicting value that abusiness firm drives from him or his clients and name of that tool is customer lifetime value.This term is defined as overall value from starting to end means till customer leaves purchasingfrom corporation. Nobody has idea that how long and how far a relationship will go withcompany of a consumer. This type of estimation needs calculation of customer lifetime value.This term is stated as a periodic value that is possessed by customer while becoming customer ofHomebase company. This situation is comprehended as one example and this e.g. is, if acustomer is linked with association from past 18 months and are making regular purchasing onshort term basic then value of this period is £x.There are many factors that affect determinants of customer lifetime value and details ofthese aspects are stated as beneath:Present Value:- This is elaborated as a definite term which is a rate of repetitivepurchases from a single business firm. This is a discounted rate of cash flows which is generatedthrough present customer base. Main tool that is to be use in calculation of CLV is time value ofmoney as entire customer lifetime value relies upon time duration that is an entire life of bond ofcustomer and association.1
Customer Loyalty:- Customer value management is a terminology that depends uponoverall customer loyalty. More loyal a person is than CLV is higher and on the other hand lessloyal customer possess lesser value for corporation. For instance, a client is loyal and satisfiedwith offerings of company then customer lifetime value is high and apart from this, if othercustomer does not found satisfaction with services of Homebase company then this type ofcustomer could not be a regular or loyal clients for association. To enhance CLV, company canprovide better quality services to specially those consumers whom are not satisfy with company'sservices.Mathematical formula:- There are some professional experts whom are able incalculating customer lifetime value by applying mathematical formula. Main advantages of thismethod is that it provides a certain result that is helpful in making effectual decisions forcorporation. There are multiple factors which is to be comprised in mathematical format andthese are clients, total revenue, period of linking of company and customer etc. For example, itcould be calculated as Total revenue÷Number of months since customer joined. Main sectionof this formula is average of revenues generated by consumer. Average of revenues are quiteaccurate number and organisation can consider it in efficient decision making. There are somedifferent formulas are present in order to calculate customer lifetime value, like:CLV = ((T x AOV)AGM)ALTHere; T = Average Monthly transactionsAOV = Average Order ValueALT = Average customer Lifespan (in Months)in Detail:Here; R = Monthly Retention RateD = monthly Discount RateCohort Analysis:- This is a study of a group of people that shares same type of characterattributes which is a base for group formation. In context of this, cluster is that whom arecomprised in this group will be analysed at the same time in respect to get the value of entirelifetime that a consumer has with enterprise. Main fruitfulness of this terminology is that it does2
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