Customer Lifetime Value and Marketing Strategies

This assignment is based on a collection of research papers, case studies, and articles related to customer lifetime value and marketing strategies. The documents cover topics such as deriving customer lifetime value from RFM measures, consumer dominant value creation, business segmentation, and customer relationship management. The assignment aims to provide insights into the importance of understanding customer lifetime value and its application in marketing strategies.

CUSTOMER VALUE
MANAGEMENT

Table of Contents
INTRODUCTION..........................................................................................................................1
P1 Different factors which analyse customer lifetime value......................................................1
P2 Main Benefits of customer lifetime value of the organisation...............................................3
P3 Influence of customer lifetime value.....................................................................................4
M1 Concept of customer lifetime value and its relation with customer data of B2B or B2C
organization.................................................................................................................................5
P4 Different types of market segmentation and opportunities for customer value creation.......6
P5 Opportunities for customer value creation and its evaluation...............................................7
M2 different segmentation models of B2C or B2B and its marketing intelligence....................8
P6 Different techniques to analyse customer loyalty..................................................................8
M3 Different stages of decision making process and CLV........................................................9
D1 key concepts of customer lifetime value management........................................................10

INTRODUCTION
Customer lifetime value can can be discussed as the relationship with the
customer which gives the net profit to the company. This relationship is defined in the monetary
terms in which customer is valued where the cash flow from the customer is calculated
(Nenonen and Storbacka, 2016). It is an important concept of marketing mix model and shows
the way to capture new customers. Customer value management can be defines as the
comparison of cash flows perceived from the customers in relation to the customers of the
rivalries. It is an important way of making relation with the mechanism of purchasing powers
which has direct impact on profit and loss, ROI, and market share of the company.
LO1
P1 Different factors which analyse customer lifetime value
Customer can achieve its value by the delivering of the most valuable products and
services. It is one the important marketing tool. The expected value created by customers in
retail sector in the organisations make the customers understand its value and make them decide
to take actions on the experience and use of products. Currently, retail sector working from
home have achieved customer's satisfaction by giving them innovative products and services.
This satisfaction can be decided as the performance detected which is resulted from the person's
emotions and feelings by using the product as compared to the products of the competitive
bodies (Abe, 2015). In market based planning, customer's orientation is also very crucial and
plays an important in which the leader have the responsibility to sustain the the customers by
providing great level of satisfaction and by implementing good marketing skills. And through
these innovative ideas it is already decided that customer will definitely perceive good quality
products. The calculation cost provided the value of the home based products which are related
with their stages of emotions and decisions like corporate brand, functional image, personnel etc.
To understand customers, Customer lifetime values are used as metric and most common factor
in marketing research. CLV can be calculated through
1. Average revenue per user : In this the average revenue is calculated depending upon per
customer's per month and then multiplied to get two year or one CLV.
2. Cohort Analysis : A bunch of customers that share a portion of characteristics.
Companies can get clear vision of relationships with customers by examining cohorts.
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3. Individualized CLV : In this companies mainly focus on the calculation of total value of
customers by running any campaign, channel or source.
Advantages Of CLV:
1. Helps in saving funds : This the the most cost effective and cheapest method which is used
in Home base for the retention of customers instead of searching the new customers. Here
customer's satisfaction are treated on higher level and they understand this as well. That's why
the main focus is fulfilling customer's exceptions (King, Dhameeth and Kim, 2017). This on
other saves time and momey of the company which they spend on building new customer base
line The new customers no doubt are difficult to understand and consumes more time of the
managers to know the complete preview of the products and services of the company.
2. High level of marketing: It heads towards concrete marketing of the customers of Home
base by calculating the benefits produced by the products sold of their customers.
3. Increment in Branding : There is regular contact with customers which leads to
popularity in brands of the products.
Related to their purchasing power and meeting the expectations the companies have to generate
trust over the expectations of the customers. And for this security system workplace has been
develop by Home base. Instead of finding new customers which proves good for the company ,
Home base tries to retain their old customers by using their own Marketing metrics, which is an
old age calculation (Zhang, Liang and Wang, 2016) . Rather than this, organisation can calculate
by simply deducting the cost revenue from the amount which is produced by the customers. And
for actual value the leaders need to identify the real value when it was created. At each and every
point of marketing , profits should be measured accurately and then summed up all together.
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CLV INDEX
P2 Main Benefits of customer lifetime value of the organisation
For the success of business and functional operations, customer lifetime value creation
process is used by the marketers. In current situation, where the the technology has reached
pinnacle and every private organisation wants to be ahead, there is always a nice approach in the
market to reach the unexploited customers (Clempner and Poznyak, 2014). Currently Home base
has supported various strategies by creating potential value of customers and providing a chance
to develop customer relationship to their employees which effects their profit and sales.
Customer's engagement in the products and widening of the relationship between employees and
customers has effected Home base CLV a lot. Various benefits of CLV can be described on this
basis:
1. Perfect Segmentation of customers: For the correct customer's identification, and
segmentation Customized services and leading profiles are very necessary elements.
These things depends on the dynamic and rational pricing chart which is received from
the high profits over the customers (Anker, Sparks and Grönroos, 2015). Then targeting
the loyal customer of Home-base with an effective and potential values and accurate
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forecasting generating the leading conversation ratios by segmentation is an important
part of customer lifetime value. It helps in the determination of the investment and
indicates the valuable management operations.
2. Decent forecasting : By predicting the upcoming services and demands of the customers,
the manager of Home base decides the availability of the products and services which
helps the company in deciding the optimum level of workers, assets and inventory. It
trims the loss of productivity by guiding the good use of better resource allocation
strategies (Gong, Choi and Murdy, 2016). Customer's behaviour and its availability is
very important
3. Developing Loyal Customer base : values of customers are considered at much higher
level which indicates the betterment in operational efficiency of Homebase and by this
customer dissatisfaction is also detected.
4. Retaining customer : Customer lifetime creation also provides initiative to design new
programs which results in the cost reduction of customer products. Home base also
emphasizes on the priorities of the customers and helps in developing strategies for the
development and growth.
Thus, in can be finalised that Customer lifetime value creation ia an important aspect in
designing the business model and helps in implementing strategies for the upliftment of the
business and increase in customer support. Through various assumptions and metrics customers
life time value can be calculated which can provide the advantage and add the involvement of
customers in Home base. Forecasting the demands and supplies of services and products
increases the customer value orientation and proper allocation of resources leads the profit value.
P3 Influence of customer lifetime value
There are various responsibilities of Home base marketers and they face many challenges
in this competitive world. To increase the customer lifetime value and their excitement towards
their stores they do their their best and apply various strategies. Various factors are there which
are responsible for maintaining loyal customer base line and achieving greater sales and
reputation in the market (Lilien, 2016). Business to customer is a crucial part of this type of
dealing in the market which is directly deals to the consumers. The transaction is between the
organisation and the consumers who are the end users and are counterpart of their products and
services. CLV in Home base mainly forces on meeting the expectation of customers in business
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to customer type of transactions. CLV clearly shows that Home base needs to focus the wants of
the customers. Transaction one in B2b in many countries refers to commercial type of business.
We can take the example of Home base which initiated its business through retailing and did
reselling of the products and services to others. CLV was also provided in this organisation as
the company already new the customer won't opt for any other brand. They were able to retain
customers and grew quickly. Some important factors which influence the customer lifetime
value are as follows:
1. Long run relationship : According research, long term relationship between the
organisation and the customers in various part of the countries is very important and play
a vital role and leave a positive effect on CLV (Brotspies and Weinstein, 2017). Through
various communication ways like digital marketing, email and online marketing they
keep in touch wit their loyal customers.
2. Loyalty in Brand : Loyalty of customers puts an important effect on behaviour and values
of customers. Behaviour of the customers is very much affected by the brand of the
enterprise. Customers feel reputed by using the products and services of better and
competitive brand. Home base has created the similar type of brand and has implemented
various types business strategies like introducing quality products and services by doing
research and providing their products al low prices compared to other products .
3. Incentives and awards: Organizations use all methods to get attention in the market but
they apply the scheme of incentive for their customers which attracts many customers
and invites the new group too. Home base uses the same scheme and increases its CLV
which helps in grabbing their customer loyalty and increases the profitability of the
company. It keeps its eye on the options provided by the other companies as different
companies try to grab the attention of the customers.
M1 Concept of customer lifetime value and its relation with customer data of B2B or B2C
organization.
The value of the business developed due to the relationship of the customer with the
company and the future cash flows defines the customer lifetime value. It is a very effective and
useful metric and basically used when the company has to target the customers. As all marketing
managers know that it is difficult to predict or give the judgement regarding the relationship of
the customers with the company, so CLV helps in estimating the value of customers by
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multiplying into average value and number of repeat sales and average retention time. In B2B
marketing organizations are involved while there is direct link to customers in B2C marketing.
LO2
P4 Different types of market segmentation and opportunities for customer value creation
Segmentation is a process where large units are divided into small units with the less or
more but same type of characteristics. It is a type of marketing concept used branched market set
up under small sub sets which consists of of similar customers using the products and services or
can be said that the customer are found with same demand and preferences.. Here all individuals
meet of same mentality and is a small set of market within a huge market. Being a marketing
manager it can be identified that the business model of any company is based on marketing mix
essentials segments. Segmentation of the market, targeting the market and the customers and
then finally positioning the branded products are very important for customer value
opportunities. Impelling segmentation of the market forces the brand to make its position in the
market which automatically influences the customers purchasing power. CLV rises up if the
organisation meets the expectation of customers.
Targeting of customers is also basic point in which a set of people from the segment of market is
targeted and their demands are analysed according to the market. Depending upon the future and
present needs of the customers Home Base CLV is decided and the customers are targeted. Some
important segmentation strategies are considered :
1. Geographical segmentation : On the basis of geography company determines its market
and customers are analysed according to the regions, country, communities. Home Base
CLV creates customers sometimes according to geographical segmentation.
2. Demographic segmentation : On the basis gender, age, income,race the market
segmentation is done. One of the important thing that has been considered in Home base
is examining the values and expectation of the consumer which they possess towards
their product and services in B2C marketing process (Stott, Stone and Fae, 2016).
Targeting and segmentation customers according to these factors also help in increasing
the sales and improvising the profits of the company. Home Base CLV's demographic
segmentation helps in increasing their margins and through CLV they apply strategies
accordingly.
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3. Behavioural Segmentation : Customers behaviour, choices, decision making are preferred
in this type segmentation. Some customer's knowledge and usage decide the sales of the
company. Through CLV Home Base focuses on the interest of customers, thereby their
customer value creation is created.
4. Psycho graphic segmentation: It is most useful and effective strategy of market
segmentation which is decided on the basis of personality , attitude and lifestyle. CLV
studies the entire customer attitude and choices of the products. Accordingly, segmentation
of the customer is done.
After analysing these strategies it can be evaluated that psycho graphic segmentation is very
proper to create customer lifetime value. They make decisions by targeting the personality of the
customers and generate their sales(Iqbal, 2017). This simultaneously affects their buying
decision process. The customers of different mentality and thinking have different expectations
and the company meets their expectations by analysing these traits.
P5 Opportunities for customer value creation and its evaluation.
The people who desire to participate in the decision making process of products and
services are the main customers of the company. In Customer value management the valueof any
organisation is created by using the methods of marketing. Marketing in B2C can be described
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as process which is used to directly connect with the customers. In B2B marketing organisations
are connected to each . Customer value management means creating value or the position of the
company among the customers with the help of different marketing strategies. In B2B marketing
following steps are followed:
1.Discovery phase: In this phase company identifies the needs and expectations of the product
components and creates decision making model
2. Consideration phase : Here the problem arises as to how the company like Home Base
solves the problems with the buyers.
There are different kinds of models which are considered for marketing of products and services:
Recognising Problems: At the first stage, the consumer detects the problems which they face
during the purchase of the product.
Searching information : Secondly, valuable information regarding the products would be
searched out so that the decision of purchasing the product could be taken out by the customers.
Analysing the alternatives : This is the common phenomena of the consumer to find the
alternative product at low price (Moro, Cortez and Rita, 2015) .
Purchasing Decision : at this stage finally the customer makes the decision of purchasing the
product at the decided rate.
Evaluation before purchase : At last stage of purchase customer satisfies itself by providing
reviews of the product so that no further evaluation is needed by the organization.
M2 different segmentation models of B2C or B2B and its marketing intelligence.
Customer segmentation models in B2C or B2B are various. They are based on targeting
the huge market and focuses on reaching the consumer's wants and priorities. For long term
relationship efficiency in marketing, approaching new market opportunities, fine branding and
customer retaining power is necessary (Ekinci, Ülengin, Uray and Ülengin, 2014). It is a
divisional practise in which customers are grouped into different sections on the basis of gender,
age,habits etc. this makes organisation more easy to target their variety and the organisation can
create an easy approach towards customers. They are classified into geographic, demographic,
psycho graphic and behavioural level. In geographical level company targets customer according
to region, country or state. In demographic level age, income, occupation education level,
ethnicity all these things are classified . These things come under B2b transaction. In B2c
transaction market capital, industry, business life cycle all these things are evaluated. All
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activities , social class, personality, platforms are discussed in psycho graphic level and loyalty,
payment mode , demand & nature comes under behavioural level.
LO3
P6 Different techniques to analyse customer loyalty
Almost all companies use basic techniques for the management of customer relationship
and simultaneously to increase the sales. There are various techniques to maintain a positive
relation with the customers.
1. Accumulation of personal information : This is the effective way of accumulating data of
the customers so that company can easily target their segment of customer sand increase
their profitability and sales. Every organisation customizes the personal information of
their customer which directly effects the management and their buying decisions can be
judged. There are various ways of accumulating data like through surveys and social
media sites. Technology has become so advanced that in today's era companies can reach
their customers through social media sites and can know their demands and views.
2. Resource Allocation according to target : It has been figured out that 70 to 80 percent
profit is generated from the whole business and comes from 20 to 30 percent which is
needed by the organization (Lilien, 2016). It is an important tool of organizational
structure to maintain the customer relationship and keep the cream layer of customers
satisfied. Through availability of the resources customers always remain in touch with
the leaders of the company. A relation is developed between customer and employees.
Leaders maintain this relationship and increase their sales.
3. Updating and sending regular information : Customers can pay attention to the company
if the information regarding the products and services of that company are regularly
updated to the customer. Home base is one the company which has used this method to
to be in touch with the customers and the results are effective and worthy. It is having its
own site through it updated its information regarding products and services and keep it's
customers satisfied. Focussing on the views of the customers and keeping the goods of
their demands comes in its first priority.
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M3 Different stages of decision making process and CLV
With the help of decision making process manager can easily solve the problems of the
organisation and find out the suitable way for it. Different stages involved in decision making
process are :
1. Analysing the decision: First step is to address the problem and deciding as why that
problem has arrived with the employees or with the customers of the organization.
2. Collecting information : Decisions are made on the basis of facts and figures and so
information is gathered about the customers.
3. Identifying alternatives : After getting a clear view of the problem solutions should be
taken out so that objective should be achieved.
4. Choosing alternatives : there are various risks involved in the way which the managers of
the company have chosen out. So the alternatives should always remain ready.
5. Proceed to action : then the plan oriented should be implemented and in this process the
resources are identified. And many problems relating to the component of action can
arise (Cannon, Cannon and Schwaiger, 2014).
6. Reviewing the decision : Once a decision should be overlooked for any kind of
evaluation and improvement.
D1 key concepts of customer lifetime value management
The key concept of customer lifetime value is to make vital decisions in marketing,
product development, sales and customer support (Delafrooz and Farzanfar, 2016). The most
important thing which the company
thinks of is increase in profitability , making suitable investment and getting return on that
investment in the form of sales.
CONCLUSION:
So it is finally concluded that Home base company follows Customer Lifetime Value
(CLV) to increase its net profit and sales. Through this they attain maximum satisfaction of
customers and thus increase their sales margin. Company also follows the marketing essentials
like segmentation of market , targeting the segmented customers and positioning of products.
Through these levels company gain its position and keep pace with their competitors.
Maintaining loyal customers is the prime factor of this company.
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REFERENCES:
Abe, M., 2015. 5 Deriving Customer Lifetime Value from RFM Measures: Insights into
Customer Retention and Acquisition.
Anker, T.B., Sparks, L., Moutinho, L. and Grönroos, C., 2015. Consumer dominant value
creation: A theoretical response to the recent call for a consumer dominant logic for
marketing. European Journal of Marketing, 49(3/4), pp.532-560.
Brotspies, H. and Weinstein, A., 2017. Rethinking business segmentation: a conceptual model
and strategic insights. Journal of Strategic Marketing, pp.1-13.
Cascetta, E., Carteni, A., Pagliara, F. and Montanino, M., 2015. A new look at planning and
designing transportation systems: A decision-making model based on cognitive rationality,
stakeholder engagement and quantitative methods. Transport policy, 38, pp.27-39.
Clempner, J.B. and Poznyak, A.S., 2014. Simple computing of the customer lifetime value: A
fixed local-optimal policy approach. Journal of Systems Science and Systems
Engineering, 23(4), pp.439-459.
Gong, T., Choi, J.N. and Murdy, S., 2016. Does customer value creation behavior drive cus.,
Persson, G. and Huemer, L., 2016. Logistics service providers and value creation through
collaboration: a case study. Long Range Planning, 49(1), pp.117-128.
Iqbal, M., 2017. Market Testing Procedures for B2C and B2B in Perspective of Radical
Innovation. International Journal of Abe, M., 2015. 5 Deriving Customer Lifetime Value
from RFM Measures: Insights into Customer Retention and Acquisition.
Anker, T.B., Sparks, L., Moutinho, L. and Grönroos, C., 2015. Consumer dominant value
creation: A theoretical response to the recent call for a consumer dominant logic for
marketing. European Journal of Marketing, 49(3/4), pp.532-560.
Brotspies, H. and Weinstein, A., 2017. Rethinking business segmentation: a conceptual model
and strategic insights. Journal of Strategic Marketing, pp.1-13.
Cascetta, E., Carteni, A., Pagliara, F. and Montanino, M., 2015. A new look at planning and
designing transportation systems: A decision-making model based on cognitive rationality,
stakeholder engagement and quantitative methods. Transport policy, 38, pp.27-39.
Clempner, J.B. and Poznyak, A.S., 2014. Simple computing of the customer lifetime value: A
fixed local-optimal policy approach. Journal of Systems Science and Systems
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Engineering, 23(4), pp.439-459Customer Relationship Marketing and Management
(IJCRMM), 8(1), pp.15-29.
King, D.M., Dhameeth, G.S. and Kim, J.S., 2017. Modeling Moderating Effects of Customer
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Employees for Customer and Organizational Satisfaction: A Comparative Analysis.
Klöckner, C.A., 2016. Identifying Psychological Barriers and Facilitators Specific to Stages in
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Ekinci, Y., Ülengin, F., Uray, N. and Ülengin, B., 2014. Analysis of customer lifetime value
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Operational Research, 237(1), pp.278-288.
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