Customer Value Management: Strategies and Benefits Report

This report delves into the critical aspects of Customer Value Management (CVM), examining strategies for determining and enhancing customer lifetime value (CLV). It begins by defining CLV and outlining the components essential for its calculation, emphasizing the importance of understanding customer behavior and building strong customer relationships. The report explores the benefits of CLV to a business organization, including effective customer segmentation, improved forecasting, and enhanced loyalty management. It then identifies various factors that influence CLV, such as professionalism, resource utilization, and the differences between B2B and B2C models. The analysis further extends to market segmentation strategies, with a focus on how Homebase can segment its customer base effectively. The report also evaluates B2B and B2C decision-making models, highlighting opportunities for customer value creation. Finally, it discusses techniques and models organizations can apply to increase customer relationship and customer loyalty, providing a comprehensive overview of CVM principles and their practical application.

Customer Value Management

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Different components that enable a business entity to determine customer’s lifetime value 1
P2 Justify the benefits of customer lifetime value to a business organisation............................2
P3 Factors that influence customer lifetime value......................................................................4
TASK 2............................................................................................................................................5
P4 Determine the types of market segmentation strategies that can be applied to customer base
.....................................................................................................................................................5
P5 Evaluate B2B and B2C decision making models with opportunities for customer value
creation........................................................................................................................................6
TASK 3............................................................................................................................................7
P6 Different techniques and models organisation can apply to increase customer relationship
and customer loyalty...................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
In today’s business environment changing needs and requirements of customers on
continuous basis become a major challenge for firms. Various efforts are done by business
organisation to retain their customers for a long time period and for this satisfy their needs is
very essential (Hammer, 2015). Create and maintain a good relationship with customers is also
very significant for keep them for a long time period. Customer lifetime value increase profits of
enterprise and increase customer base of entity. It is very difficult a firm to predict to how long
the customer will stay with a firm. It is very essential for business entity to adopt effective and
innovative customer relationship management strategies to manage customers and manage the
number of its profits. Various components that help business enterprise to determine customer’s
lifetime value and the major elements that influence customer lifetime value is all detailed in this
report.
TASK 1
P1 Different components that enable a business entity to determine customer’s lifetime value
Customers are the one which used to drive business in any direction. This aspect need to
understand better and effective by managers of a company so that they could maintain and
manage their customer lifetime value in a determined manner. A customer lifetime value define
and describe as the prediction and estimation of net profit ascertain by a business in order to
maintain and manage future relationship with clients so that effective and beneficial gain could
be presented (Hollensen, 2015). Thus, managers need to assess and understand all major aspects
and attribute of customer lifetime value so that a design working get presented whose profit
could be estimated in long period of course. Thus, in order to facilitate long term profit of a
company customer lifetime value is an essential and beneficial concept which need to understand
and determine properly. Henceforth, this attribute will lead to enhance profitability of a company
so that effective and determined outcome could be resource in a design framework.
This project is based on Homebase company whom used to deal n retail sector which
used to introduce a loyalty card system in their organisation. Homebase is one of a major home
enhancing retailer and garden centre with appropriate components which enable an organisation
to demonstrate about CLV:
1

 Present value: A major thing which need to understand by company is present value of
their customers (Kerzner and Kerzner, 2017). This is a major thing which have to assess
better and effective in frame by Homebase where they are going to determine present
aspect of their clients better through which they become able to deal with their needs and
wants better. Mathematical formula: Another aspect or consideration which facilitate to determine
customer lifetime value is mathematical formula under which monetary consideration get
underpin. Hombase could divide their total revenue with number of uses joined an
association during a year. This facilitate to determine current status of their clients and
aspects better so that determined outcome could be resource. Customer’s loyalty: A major thing on which each and every business need to made their
focus in loyalty of their clients. For a success and managing customer lifetime value, it is
really essential to maintain appropriate loyal customer base. This get done through
providing appropriate discount and vouchers. This aspect will contribute in overall
success and enhancement of Homebase business where introduction of loyalty card is
essential.
 Cohort analysis: Cohort shows a gathering of people who share same qualities. This
shows different circumstances that influence CLV to make and keep up sound relations
with clients (Kim and et. al., 2015). Homebase need to distinguish every single such
individual and clients which have comparable partner with the goal that they could keep
up and deal with their better and meant working which additionally empower in
achieving targets.
P2 Justify the benefits of customer lifetime value to a business organisation
Study of concept called customer lifetime provide large number of benefits to an
enterprise. One of the main benefit of this is that it help manager in develop effective strategies,
increase knowledge about potential value to customer and this help in enable all staff members to
improve customer relationship in proactive manner. Today every business enterprise deliver high
quality products and services to customers in order to retain them for a long time period. Today
customer value not only relate with the monetary value but it affect the consumer to achieve
business growth. Study of customer value management help entity in identify various ways to
increase the number of its profits. All this provide competitive benefit to entity. Major benefits of
2

examine the concept of customer value management can be understood by the points given
below:
 Effective customer segmentation: One of the main benefit of customer lifetime value is
that it help firm in carry out segmentation and profiling of its customers in an effective
manner and this help in offer them featured products and services (Kotler, 2015). All this
results in customer satisfaction and at the same time help in generate large amount of
profits. With this entity can attract more customers towards its products.
 Better forecasting: Customer lifetime value is that factor that provide a basis to firms to
plan the number of products require to be manufacture by firm for satisfy the needs of
customers by predict future demands of consumers (Kotler, 2017). All this support
organisation in allocate resources and funds in a way so all can be utilise to an optimum
level. Further, it help entity in maintain inventory and workers require to perform various
function of business. One of the main benefit of this is that it decrease cost of business
and enhance efficiency. All this increase the chances of firm to generate large amount of
profit.
 Re-invent loyalty management: Customer lifetime value can be a indicator that reduce
customer dissatisfaction and improve operational efficiency. Study of customer value
management increase knowledge of manager about the various factors that influence the
behaviour of customers influence them to buy company’s product. Better understanding
about behaviour and needs of consumers help in improve customer loyalty for a long
period. This understanding support business firms in develop their loyalty plans to make
them more effective.
 Win back/ retention of customers: concept of customer value management help firms in
develop and design new programs that reduce attrition. Business entities can prioritize on
which basis to win back the customers, formulate effective strategies.
One of the major feature of customer lifetime value is that it is not for a particular sector
as this can be apply in any industry. By analyse this concept in adequate manner business firms
can manufacture products as per the needs and requirements of customers and at the same time
can retain them for a long time period. One of the major benefit of this concept is that it provide
competitive benefit to business entity.
3

P3 Factors that influence customer lifetime value
Concept of customer lifetime value is very significant for a business organisation. One of
the main reason behind this is that it provide a opportunity to manager to identify and examine
all relevant factors that affect the purchasing pattern and buying behaviour of an individual. This
provide an opportunity to increase the effectiveness of production process by manufacture
products as per the specific needs and requirements of consumers (Kumar and Reinartz, 2016).
This not only help in satisfy the needs of customers but at the same time support in attract large
number of customers towards company’s products which provide competitive benefit to firm.
The way in which a business is operated can be divided into two one is business to
business and the other one is business to consumers. To determine the customer life time value it
is very important for a manager to understand this characteristic. For example in context of
business to business, it is very important that products should be more featured and creative.
Homebase is a big retail shop and buy from so many suppliers.
It is very essential for its suppliers to deliver quality products with this entity can maintain
number of its profits and this also affect the customer lifetime value. In context of business to
consumers, management require to focus to better satisfy the needs of its customers (Pearson,
2016). Lack of adequate products and services is the factor which largely affect the customer
lifetime value. It is very essential for firm manufactured featured products and services. In
addition to this various other factors and elements are there that required to be examine to
ascertain the customer lifetime value of Homebase. Proper evaluation of these factors is very
significant as with this entity can deal with the issues in an effective manner: Professionalism: Various factors are there that require to be examine by Homebase and
one of the major component that require to be analyse by Homebase during production of
its products and services is lack of professionalism. It is very important for a business
entity to have skilled employees and number of professional so entity can deal with the
issues in appropriate manner. With this entity can face the situation of crisis and at the
same time can maintain the customer lifetime value.
 Low utilisation of available business resources: Another component which affect the
customer lifetime value is when entity fail to utilise all its funds and resources in an
effective manner. Optimum utilisation increase efficiency of business activities and its
profits also. If enterprise has large amount of funds and resources but fail to allocate the
4

same in an effective manner then it increase the cost of production process. It is very
essential for Homebase to understand this so that its influence on business activities can
be controlled.
All these are the major factors that largely affect the customer lifetime value. By examine
these factors Homebase can control its impact on business activities and at the same time can
maintain customer lifetime value.
TASK 2
P4 Determine the types of market segmentation strategies that can be applied to customer base
Market division is the strategy for partition the market and customers into groups on
commence of their characteristics, age, premium, pay level and some more. This help firm in
select a part and offer them things to satisfy their necessities (Rihova and et. al., 2015). This
development number of association's advantages and in addition meanwhile help firm in hold
customers for difficult day and age. Further, under this, executive look at and perceive the
general population who pay for association things and get it for fulfil their requirements.
A business need to evaluate various kind of strategies which facilitate and enable them in
divide their customers better and appropriate in frame. Thus, for enhancing customer base
various kind of segmentation strategies which cold be opt by Homebase in order to enhance their
sales and getting better customer base is simplify as follow: Demographic: One of a major kind of segmentation which need to understand and
reflected by managers of a company is demographic measure of segmentation
(Schwepker and Schultz, 2015). Under this approach, market world get divided into
various aspects and consideration on the basis of age, sex etc. This facilitate in target a
single individual group so that better assessment consideration get done. Homebase could
go with this frame where all individual used to stated under particular group of reference.
Homebase could enhance their sales when they are going to target appropriate customer
on the basis of age or gender. By targeting the right group to right delivery of services, it
directly lead to facilitate better products delivery which used to enhance customer base in
order to gain better and determined outcome in frame. Thus, customers used to target and
segment on the basis of various demographics.
5

 Geographic: Under this segmentation strategy, things get divided on the basis of region,
parts of the nation, world etc. It is a major duty of managers to divide their working
operations area into various groups and aspects under a geographic frame of region.
Henceforth, business managers need to determine such areas better so that appropriated
delivery of products get done. Homebase need to divide their customers on the basis of
geographic section so that they could facilitate effective and better working. On this
level of segmentation, Homebase could gain better benefits in near future course of
frame. They could facilitate and deliver better products and services to each group of
individual whether they belong to any part of the world. Like they could target US
customers by preparing and manufacturing quality and adorable products with high
range. This enable them in getting maximum number of customers from UK which
further enables in managing effective customer base in nature of frame. Psychographic: In this attribute business managers required to target individuals mindset
so that they become able to made products and services differ from others. For better
customer lifetime value, it is really essential to target mindset of a person so that they
could deal out better. Homebase used to target their clients better so that they could
facilitate and deliver better quality services. This get done by distributing loyalty cards to
all clients. Such customer base could be created better and in determined manner through
define mindset individuals. Homebase could create their customer base properly while
targeting only such individuals whom have mind to buy higher standard products and
services. Thus, their price of products in UK is relatively high and quite expensive as
compared with other organisation products and services. Thus, Homebase could create
their customer base by targeting expensive mind of users.
 Behavioural: Another attribute which need to assess and understand by managers of a
company is based on their behaviour (Stark, 2015). A manager always need to understand
behaviour of their client before delivering products and services. This technique support
in defining things better and effective so that better working management get done.
Homebase need to deliver their products and services as per the behaviour of their users
so that supportive delivery of products used to get done. This result in enhancing
customer lifetime value as well as become loyal towards company.
6

P5 Evaluate B2B and B2C decision making models with opportunities for customer value
creation
Decisions making process for anything is not a easy attribute. This need to understand
better and effective in frame so that suitable assessment of work get done. In business to business
working or while managing operations with customers effective decision making models need to
assess (Weinstein and Pohlman, 2015). Thus, for creating opportunities for customer value
creation, it is really essential to draw certain attribute and aspects better through which beneficial
judgement could be carried down. Thus, following are several number of things which need to
determine by Homebase while dealing in B2B context and in B2C context:
Decision making models B2C B2B
Rational or classical model of
decision making:
In business to clients
viewpoint, method of
reasoning model of basic
leadership need to use. Here,
administration need to see all
related issues of an
organization and after that
edge destinations in setting of
them. Homebase could use this
approach with the goal that
better and viable judgment for
customers could be support.
Rationale decision making
define as beneficial method in
order to which things get
distributed better and in a
definite manner. While dealing
in business, various complex
situation get arise which need
to assess and understand
properly. Thus, dealing such
aspects of complex situation
enable in dealing various
consideration better.
Homebase need to understand
this aspect in better manner.
Retrospective decision making
model
An organisation need to
produce such products and
services which define some
value to their clients in a better
manner so that they could get
satisfied. Henceforth, a proper
A business could pick up
progress just when suitable and
significant judgement could be
decide. Review basic
leadership demonstrate
empower representatives to do
7

and better evaluation is
essential which need to get
done on various products and
services of a company in order
to assess effective outcome in
frame.
work successfully with the
goal that better and productive
result could be pick up.
Homebase need to done this
angle and characteristic
legitimately with the goal that
compelling and proficient
result could be drawn.
TASK 3
P6 Different techniques and models organisation can apply to increase customer relationship and
customer loyalty
Client relationship is where an association used to encourage better and strong bond with
their customers. This relationship is useful in overseeing an incentive towards them through
giving better and proper quality items and administrations. Alongside this, client dedication
stands when a client used to get items and administrations of a specific brand over and over.
Consequently, it is extremely basic for administration of Homebase to decide every single such
device, procedures and techniques which could be connected by them so as to increase better
client base with viable relationship and their return to towards item and administrations end up
conceivable: Social media technique: One of a beneficial attribute which could be determine and
implement by an organisation in their working is social media technique (Xu, Peak and
Prybutok, 2015). Here, business need to assess and contribute better towards their
customers. Social media is one of a best approach to go with such attribute. Facebook,
Gmail, twitter etc. are certain kind of social media technique through which business
could maintain and facilitate effective customer relationship. This enable and support in
drawing things better and effective in nature so that supportive outcome could be drawn. Telephone communication: Another communication process or attribute which facilitate
in building better relationship with clients is telephonic communication. Managers have
to understand and estimate this thing better so that they could become able to manage
things better and determine manner. Thus, telephonic communication define as essential
8

and better thing to manage various aspects and attribute better. Hombase could go with
this aspect better so that effective customer relationship and customer loyalty could be
promoted.
 Reward system: Now and again, administration need to give proper reward to every one
of their clients and clients. This reward framework empower and bolster in overseeing
things legitimately with the goal that better and steady result could be attracted terms of
unwavering and rehash buy. Henceforth, administration need to see such characteristic
legitimately and after that give reasonable prizes to their customers. Homebase will going
to detail reasonable association with their clients with usage of fitting prize framework.
CONCLUSION
From the above given project report, it can be summarised that it is very essential for a
business enterprise to determine the customer’s lifetime value and for this various factors are
there that can be used by business organisation. Study of customer lifetime value provide large
number of benefits to a firm. Further various components are there that affect the customer
lifetime value and manager remain responsible to identify and examine those factors. Different
strategies are there that can be use by company for carry out segmentation. With this entity can
generate large amount of profits and at the same time can maintain its market share. Various
decision making models are there that can be use for take right decision related with B2B and
B2C. Create and maintain good relationship with customers is also come under the concept of
customer value management. Today every business enterprise want to increase customer loyalty
and various methods and tools are there which can be use by firms.
9