Customer Value Management in Business

This assignment delves into the concept of customer value management in business, exploring various techniques such as co-creating customer value, quality management, and product lifecycle management. It examines the relationships between entrepreneurship, market orientation, and learning orientation, providing insights into how these factors contribute to customer value management. The document is a valuable resource for students looking to understand this complex topic.

Customer Value Management

Table of Contents
INTRODUCTION...........................................................................................................................1
LO1.............................................................................................................................................1
a) Analyse various components that enable an organisation to calculate customer's lifetime
value. (P1)...................................................................................................................................1
b) Benefits of CLV(P2)...............................................................................................................2
c) Factors affecting the CLV(P3)................................................................................................3
d) Concept of the customer's lifetime value in B2B or B2C context. (M1)................................3
LO2.............................................................................................................................................4
1) Different types of the market segmentation strategies.(P4)....................................................4
2) B2B and B2C decision making models(P5)...........................................................................5
3) Various segmentation models in B2C and B2B to generate key insight and marketing
intelligence for customer value creation (M2)............................................................................6
LO3.............................................................................................................................................6
P6) Different techniques and methods that organization can apply to increase customer loyalty
and relationship...........................................................................................................................6
Evaluation of techniques and methods of CLV(M3)..................................................................7
D1 Key concept of customer lifetime and concepts of CLV......................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Customers are the blood and soul for the organisation and plays a very crucial role in the
success and sustainability of the company. The organisations have to look after the effective
management of the requirements and demands of the customers to gain a very effective
sustainability and revenue generation. (Armstrong and et.al., 2015). The company we have taken
for the context is Home base, which works in the SMS based broadcasting. In this report, we will
discuss the various components that helps the company to determine its lifetime customer value
and its benefits. Various factor that impact on the lifetime value is been discussed. Various
market segments are been considered and different types of business models are been focused
along with different types of methods to increase customer relationship and loyalty (Beckers,
Risselada and Verhoef, 2016).
LO1
a) Analyse various components that enable an organisation to calculate customer's lifetime value.
(P1)
Customers play a very crucial role in the value forming a company. The satisfied and
loyal customer base will help the company to gain a better profitability and helps it to meet the
targeted goals. Thus, to maintain and sustain the customer is very necessary for a company. The
customer lifetime value is a standard that helps the company to measure its net profit from a
particular individual customers. It helps the company to determine the extant of the importance
of a customer in respect to the relation of the customer with the company (Chacour and Ulaga
2015). It helps the company to identify its monetary resources and make a plan on its efficient
spending of the money. The customer's Lifetime value or CLV is calculated by removing the
cost of the providing a service to a customer from the profit gained from an individual customer
of the company. It includes the amount of the expenditure that is been made on a customer in
comparison of the revenue or benefit gained from him on a week, month or annual basis. Some
times it helps to gain a better productivity by the company. In most of cases it leads the company
to avoid the expanses on the advertising process which may adversely affect the over all
performance of the company (Christopher, 2016). It helps the company to identify and adopt the
suitable measures to satisfy its old and new customers.
Various ways to calculate the CLV for a company is
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 Average revenue per user: This helps the company to determine the average revenue of
the customer per month and then multiply the value with 12 or 24 to get annual or
biannual CLV of Homebase (Di Benedetto and Kim, 2015).
 Cohort analysis: It includes the various factors of the changes that occurs in the
company with the course of time. It helps the company to identify the changes in the
customers requirements with the passage of time. It is deeply based on the factors like
market changes, seasonality and customer's preferences.
 Individualized CLV: It helps the company to identify the total value created by an
individual customer through various channels, campaigns or other mediums such as
coupons etc. This may also include the social media and digital marketing which helps
the company to identify the resources efficiently (Doligalski, 2014).
This measures help in the better management of the different operations that helps in the
improvement of the efficiency and better customer satisfaction level that help in the rise in their
CLV in a better way for Home base.
b) Benefits of CLV(P2)
The approach of CLV lays a very deep and sustaining impact on the organisation like
Homebase. The process of CLV lays a very deep impact on the company and has many benefits
for the betterment of the business functions of the company. The important benefits of the CLV
is describesd below:
 Business assets: The CLV helps the Home base to provide the exact idea about total
assets that are been owned by the company in a very significant and detailed manner.
 Customer Segmentation: The CLV process helps the company like Homebase to
segregate and classify its different customers. It helps the company to identify its
permanent and potential customers (Flint, Blocker and Boutin Jr, 2011). This will help in
the rise of the better customer's satisfaction at Home base.
 Complaint management: The process of CLV helps the company to look after and sort
out any sort of problem that is been faced by the company. This will make the home base
to immediately take the appropriate measures to solve the problem. Also, it will improve
the productivity of home base.
 Sustain the customers: This approach will help the company to retain and sustain its
customers by taking the appropriate measures that will support company to achive the
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fulfilments of needs and requirements and have a sustainable consumer loyalty towards
Home base (Frow, Reisman and Payne, 2015). This will help in better customer retention
for the Home base.
 Better Return of Investments: The process of CLV helps the company to take the
appropriate measures in order to meet the needs and demands of the company. This will
aid the organisation like Home base to have a better market share and will support the
business firm to meet the needs of the buyers and gain a better revenue in return of the
resources it has implemented (Glennon and et.al., 2016). The better ROI will suport the
enterprise to give the better output to its customer's as well as the stake holders.
c) Factors affecting the CLV(P3)
The customer's lifetime value is deeply affected by the various sort of factors that will lay
a direct or indirect impact on the processing of the CLV in an organisation like Homebase. This
factors not only influence the CLV but also leads the company to meet the requirements of
clients to gain a better service from the company. Besides this, the other organisational factors
too lays a very deep and significant effect on the operations of the company (Goetsch and Davis,
2014). Some major factors that affect the operations of the company and its CLV are as follows:
 Consumer purchasing: The purchasing capacity of the consumer lays a very deep and
significant effect on the operations of the company. The consumer will only purchase the
good or the service from a company when he is thoroughly satisfied. This will lead the
company to provide better services to the customers and meet their requirements in a very
significant manner. Besides this, this helps the company to identify the suitable
purchasing power of the customers (Hammer, 2015).
 Customer Loyalty: The customer loyalty is also a very vital element that is required to
be taken into knowledge by the company. The loyal customer will support company to
gain a better productivity and meet requirements of company. The loyalty of the customer
will help the business entity to have an effective market share and generate a suitable
amount of revenue to carry out the operations and have an effective CLV (Kerzner and
Kerzner, 2017).
 Services by Company: The services or the products that are been produced by the
company will have a significant effect on operations of the company that will help the
business firm to gain a better customer satisfaction level. The satisfied customer will lead
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to purchase more goods and services from company which will support company to
increase its profit to create a better customer's lifetime value (Kleiner, 2016).
Other than this, the various factors such as building a better customer relationship, brand
loyalty, up selling or cross selling of goods or services, better discounts and rewards to the loyal
customers and giving a better after service also helps in improving the CLV for the Home base.
d) Concept of the customer's lifetime value in B2B or B2C context. (M1)
The Customer lifetime value(CLV) is a measurement or predictions that is been based on
the collection of various sort of customer related data that helps the business to determine the
better share of the revenue or profit generated. It supports company to gain an effective market
part and meet needs of the organisation. It leads the company to gain a better idea about
resources used by customers and revenue that is been gained by the company in return.
The CLV helps the company to have a better idea of the consumer's requirements and
thus take appropriate measures to meet them in a very effective manner. The process is deeply
based on the collection of the consumer data that assist the company to make the suitable
measures. The process of CLV assists the company to have a better part of the revenue for B2C
or B2B companies. While in the B2B, the businesses interact with each other to gain a better
productivity. On the other hand, In B2C, the interaction between a business and the customers
take place that helps the business organisation to gain a better share of market. The B2B is the
system in which the company or a business sales the services or the products to other business.
While in the B2C, the business or the company provide its services to the customer. In case of
B2B, the CLV supports the entity to have a better collection of consumer data that supports
company to gain a better productivity and idea to develop better product or services. In case of
B2C the collection of the data helps the company to get idea of customers requirements and meet
needs and demands of the consumers.
LO2
1) Different types of the market segmentation strategies.(P4)
The consumer base or the market of the business organisation is deeply dependent on the
operations of the company and helps the company to meet the needs and demands of its clients
by developing the products or the services accordingly. The segmentation of the market supports
organisation to meet the needs of the customer's in very significant manner. This helps company
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to make a better targets and meet requirements of company in a better way by using certain
market segmentation strategies which are as follows:
 Geographic segmentation: This includes the practice of developing the market on the
basis of the geographical location. This allows the company to cater the customers of
various locality or region and plan the strategies accordingly. As the people of various
region will have different types of the taste or requirements. Thus, the company has to
take suitable measures to cater the requirements of the customers.
 Demographic segmentation: In this, the customers are been segmented on the basis of
the various factors like marital status, race, religion, occupation, country etc. this helps
the company to plan the better services or the products according the customers. Besides
this, it will help the company to carter various types of customers (Xu, Peak and
Prybutok, 2015).
 Behavioural segmentation: This is based largely on the behaviour or the attitude of the
customer towards the company or the service. This helps the company to increase its
understanding of the knowledge of the company for its products or services and their
effective usage.
 Industrial segmentation: It is the behavioural process where a business organisation
segments its industry or the organisation and guide it to make more strategic and tactical
decisions that helps in the better management of the various operations of the business to
have a better sustainability and improve the valuation of the customer's for the company.
The better segmentation of the needs of the customers will help in the increase in the
effective management of the various operations that helps in the better development of
the various services or the products, that will lead to the effective customer satisfaction
level and increase their value.
2) B2B and B2C decision making models(P5)
The decision making model of the B2B and B2C helps the cited firm to meet the
demands of the customers that will help in effective value creation. But the decision making is
been very different in the better running of the company in the market that helps the company to
meet the requirement criteria of the company. The decision making in both the cases is deeply
dependent on the customer's requirement and the attitude. In the B2C marketing or the approach,
the company targets on the audience or the customers that are been taken into consideration. On
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the other hand, in B2B, the company targets for the efficient management of its targeted goals.
And may consists of many components or the individual. Besides this, the B2B approach isd
more complex in the decision making as compared to the B2C due to difference in the targets
and market goals.
The Decision making in the B2C approach will only include the involvement of the only sales
and marketing department in front end but in B2B approach, all the departments of the company
including HR, Sales, Marketing and even finance will be included in the decision making
process. Apart from this, the time duration of the decision making is also varies in both the
scenarios. While in B2C the decisions are been made for only weeks or months, in B2B
approach, the decisions lays for the years. The former has the highest number of the individual
customers while the later caters the group of people or companies.
3) Various segmentation models in B2C and B2B to generate key insight and marketing
intelligence for customer value creation (M2)
It is important for companies like Home base to segment their customers as it provides
marketers to get accurate picture of their service users. There are models for B2C areas and they
are as follows:
Segmentation based on need: There are many firms around the world that deliver their
customers with similar set of products and services. Firms that are able to understand the
requirements in effective manner can attain their goals and objectives (Verhoef and Lemon,
2013). For this purpose, business needs to conduct time to time market research so that needs and
requirements can be identified. Further, customer’s value is created, then proper care is taken for
their preferences and the problems that are faced by them are considered. On the other hand, for
B2B segmentations are made in relation requirement of customers.
Further, for segmentation model of B2B are also important for identifying individuals as
their clients. Below given is the model:
Needs: This is a type of scheme that enables to categorize service users based on
priorities, desired outcomes or similar needs. This is highly effective for customers like
facilitating low effort interactions or reducing complaints (Flint, Blocker and Boutin Jr, 2011).
Customers are able to develop positive perception within their mind when all the issues that are
faced by them are considered. Similarly, for B2C needs are focused so that opportunities that
prevail in the market can be identified.
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By considering both these models for B2B and B2C, it enables to the business to develop
marketing intelligence that boost up the business operations in positive manner. They are able to
attain their set goals and objectives (Kumar and Reinartz, 2016). This way, it is helpful enough
to raise customer value towards the products and services that are delivered.
LO3
P6) Different techniques and methods that organization can apply to increase customer loyalty
and relationship
Various type of methods and techniques that are applied by companies so that they are
able to raise customers relationship and loyalty. In this context, a firm is set to be attaining their
desired goals when they understand their requirement of customers and services are delivered
accordingly. Further, customers have wide choice of selecting their own desired products and
services (Nasution, Mavondo and Ndubisi, 2011). There are certain set of expectations that they
have before any purchase decision are made. They prefer to make purchases of the products and
services that best suit their needs. Below given are some methods and techniques for raising
customer’s loyalty and relationship:
Focus on measuring customers satisfaction: The rate of satisfaction that services users
have plays important role (Leroi-Werelds and et.al., 2014). This helps the business to know their
interest and preferences. When the rate of satisfaction of service users are low, then the rate of
purchases gets negatively affected. In order to identify the satisfaction level, it is important for
Homebase to conduct survey or research (Verhoef and Lemon, 2013). This also enables to
identify the areas in which they satisfaction level is very low. Appropriate steps can be taken to
overcome the problems (Martinsuo and Killen, 2014).
Skilled workers: It is essential that all the workers within the business need to know about
the type of roles and responsibilities that has to be played by them. When they are not able to
perform their roles with full efficiency, then it has negative impact over the business. Employees
are the face of firm as they have direct interaction with customers. Proper training should be
delivered by considering the areas in which they lack (Nagaoka and et.al., 2016).
Customer relation: Relationship with customers are developed when management
understand the set of preferences that are required. Appropriate steps taken enable to develop
positive perception within the mind of customers. This way, it becomes favourable enough to
raise loyalty. Further, public events should be held as it enables more and more people know
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about the services and products that are delivered. In addition to this, advise should be taken on
ways to use the products.
Customer’s retention: Customers who already know about the products and services can
easily be attracted when the problems that they were facing are properly considered. Business
need to take appropriate steps in which feedback should be taken so that they are able to
determine the issues that were faced by them (Flint, Blocker and Boutin Jr, 2011). This way,
strong relation and customer’s loyalty can be raised.
Evaluation of techniques and methods of CLV(M3)
The techniques and the methods that are been implemented by the Homebase for the
better CLV will help in measuring of the customer satisfaction helps the company to gain an
effective growth analysing and providing firm with the suitable idea about the needs and
demands of the customers (Nasution, Mavondo and Ndubisi, 2011). The skilled labour will
support organisation to tackle the requirements and work effectively to meet the requirement
criteria of the clients This will improve customer loyalty towards cited firm and helps the
company to have their retention.
D1 Key concept of customer lifetime and concepts of CLV
The customer lifetime value is very important for an organisation. At Homebase, the
CLV will support organisation to gain a good revenue that helps the company to have a good
idea about the function that are been followed by the firm to meet the customers requirements
and their demands (Raithel, Taylor and Hock, 2016). The CLV approach will support company
to gain a better profit margin that helps the company meet the demands. As Home base is SMS
broadcasting organisation, the cited firm has to provide its customers with better services(Rihova
and et.al., 2015). The various factors like consumer loyalty, purchasing power and the product
or the services that is been provided by the company plays a very significant role in the
management of the operations of the company (Stark, 2015). Other than this, it will help them to
meet the needs of the company and fulfil the demands of the customers by performing their
effective valuation and taking effective measures to meet the requirements of the customer in a
very effective manner. Home base will follow various operations that are been followed by the
organisation to increase the customer satisfaction. It is important for the better improvement of
the customer valuation.
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The CLV approach supports firm to gain a better market share and meet their
requirements. Home base will use this approach to have a control on operations that aids the firm
to meet the needs and demands at company (Verhoef and Lemon, 2013). It helps business firm to
have a better consumer sustainability and retain the potential or regular customer, thus improving
their loyalty.
CONCLUSION
Thus, on the basis of the report it can be said that the customers plays a very crucial and
important in the management of the company's growth. The report discusses the various
components that helps the company to determine lifetime customer value and its benefits.
Various factor that impact on the lifetime value are been discussed. Various market segments are
been considered and different types of business models of B2B and B2C are been taken into
consideration. Apart from this, various methods are been focused along with different types of
methods to increase customer relationship and loyalty for better CLV of the organisation.
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REFERENCES
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