Customer Value Management: Analysis for Homebase Report

This report delves into Customer Value Management (CVM), focusing on its application to Homebase, a British home improvement retailer. It begins by defining CVM and its importance, then explores the components essential for determining and calculating customer lifetime value (CLV), including cohort analysis, present value, customer loyalty, and mathematical formulas. The report highlights the benefits of CLV, such as financial growth, brand loyalty, and building goodwill. It also examines factors affecting CLV, including firm objectives, product types, service levels, market stability, technological changes, and social factors. Furthermore, the report analyzes market segmentation strategies, B2C and B2B decision-making models, and techniques for enhancing customer relationships. The analysis provides insights into how Homebase can optimize its CVM strategies to maximize customer value and achieve long-term business success. The report offers a comprehensive overview of CVM principles and their practical application within a real-world business context.

CUSTOMER
VALUE
MANAGEMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Components that enable an corporation to determine & calculate customer's lifetime value
.....................................................................................................................................................1
P2 Benefits of Customer Lifetime Value....................................................................................3
P3 Factors that affect customer lifetime value............................................................................4
TASK 2............................................................................................................................................6
P4 Types of Market Segmentation Strategies applied to customer base....................................6
P5 B2C and B2B decision-making models and demonstrate which is used to get opportunities
.....................................................................................................................................................7
TASK 3............................................................................................................................................8
P6 Different techniques and methods an organization can apply to increase customer
relationship..................................................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES .............................................................................................................................10

INTRODUCTION
Customer value management is a business tool which is used to analyse consumer's view
and their demand to provide them effective services in order to maximise profits and growth as
well (Hammer, 2015). This term basically used to maximise consumer's value in individual
manner. This is mainly focusing on designing process of firm that highlights operation and
function approaches. All these organisational activities affect on productivity as well as
profitability of firm. This report is based on Homebase which is a British home improvement
retailer organisation. This firm was founded in the year of 1979 by Sainsbury and GB-Inno-BM.
This report is discussed about Various elements to ascertain customer's lifetime value, its
advantages and Factors that impacts on CVM activities. It also represent Types of market
segmentation, B2B and B2C decision making models as well as different methods and
techniques to increase customer loyalty and relationship.
TASK 1
P1 Components that enable an corporation to determine & calculate customer's lifetime value
Customers are the last buyer of products, so for them an organisation requires to use
appropriate tools that helps to build lifetime values for them. In this, employees of organisation
also provide their effective contribution to build positive relation with target customers. These
kind of organisational activities are used to maximise profit and growth of firm in proper
manner. Main motive of Homebase is to increase customer's purchasing power and products
sales for desired growth (Hollensen, 2015). Homebase is a broadcasting organisation that provide
their effective services to customers on the basis of SMS and email facilities. Through this, they
can easily spread awareness in customer's mind for their new services. There are different
elements that enable an corporation to determine & calculate customer's lifetime value -
Cohort Analysis: This is an effective analysis process in which group of individual's are
providing their own views and preferences toward organisation's diversified business offerings.
Main objective behind this analysis is to improve values and qualities of different services for
providing higher satisfaction to target customers. This process takes less times to implement
appropriate modification in products on that basis of customer's views and employees opinion.
Through this, Homebase can easily understand their customer's requirement and demand for
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appropriate services. These kind of business activities aid to maximise customer's lifetime value
for getting long term benefits and desired growth easily.
Present Value: It is a most important analysis process that is used to identify customer's
role and values in organisational procedure. This process basically determine cost and price of
products that is offered by firm in target market. To increase customer's value, Homebase
requires to use effective methods that helps to maximise sales of products. Through this method,
Homebase can also address their service users view and opinion toward firm's operation
activities (Kerzner and Kerzner, 2017). These activities and approaches increase periodic values
to getting higher competitive advantages easily. To maximise customer's lifetime values
Homebase requires to reduce their products cost to attract maximum consumers toward this.
Customer Loyalty: For a business organisation' it is important to build strong relation
with customers to getting long term benefits easily. In this process, Homebase require to
understand their services users demand and need to serve quality services in front of them.
Through this, they can easily create customers loyalty toward their products and services as well.
In this process, employees of Homebase also play a most important role to understand
consumer's issues, need, demand and problems. Through this, they provide quality services to
them on the basis of their requirement. These kind of activities helps to provide higher
satisfaction to them in appropriate way.
Mathematical Formula: This is a statistical representation that is used to analyse
customer relationship value for an organisation in the terms of their satisfaction level and
purchasing power for specific product. It is consider appropriate data of firm's financial gain and
losses. Through this, researcher can easily analyse firm's average income and growth that
generated by target customers (Kim and et. al., 2015). These kind of analysis represent loyalty of
consumer's and their effectiveness toward organisation's products and services as well. This is a
creative and impactful approach that requires to consider by Homebase in their operational and
functional approaches. This method consider specific formula as Total revenue ÷ Number of
months since customer joined
Some other mathematical representation of this method can be -
◦ CLV = ((T x AOV)AGM)ALT
Here; T = Average Monthly transactions
AOV = Average Order Value
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ALT = Average customer Lifespan (in Months)
In Detail:
Here; R = Monthly Retention Rate
D = monthly Discount Rate
Individualized CLV: For an organisation, it is require to understand their customer's
demand and need to provide them quality services. These kind of activities maximise firm's
growth and income in appropriate way. Homebase can easily increase services users demand by
using different type of methods as cost effective approach, maximise customer's loyalty by
serving quality services and build long term relation with target users by providing higher
satisfaction to them. All these activities helps to achieve target goals and objective in appropriate
way. These approaches aid to create positive image and goodwill in target market.
P2 Benefits of Customer Lifetime Value
In a business organisation, customers play a most important role who provide desired
growth and income to firm in appropriate manner. For Homebase, it is required to mange
customer lifetime values to build their own image in target market easily. These kind of methods
will be beneficial for them to getting higher profit and desired growth. Through this Homebase
can get higher competitive advantages (Kotler, 2015). There are other benefits of Customer
Lifetime Value are given below as -
Financial growth – For a business organisation, it is required to build strong relation
with customers to getting desired growth easily. Through firm can increase their sales and
revenue by providing quality services to services users. Some of the stakeholders of company
provide appropriate investment fund to firm that helps to maximise operational activities in
effective manner. For Homebase, it is require to build strong and effective relation with
customers to maximise their purchasing power by providing desirable and quality products to
them. Through this they can easily maximise financial growth in a proper way (Kotler, 2017).
Maximise brand loyalty – Customers of a products always demand for best quality
services at any cost. So for them Homebase requires to consider effectiveness that helps to
provide higher satisfaction to them. Through this they can easily increase brand loyalty in target
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market. These types of business approaches helps to maximise firm's growth and income in
appropriate manner. Brand loyalty always maximise Customer Lifetime Value in an organisation
to getting long term benefits easily. In this process organisation requires to build strong relation
with customers to maximise their brand loyalty easily.
Build effective goodwill in market – Each and every organisation in a economy are
establish to achieve their target goals and objectives in appropriate way. On the others hand they
also desired to build their positive image and effective goodwill in target market by providing
quality services to their target customers. In this process they require to analyse market and
customers demand to produce quality services and serve in front of them. In this process, cost
effective method of organisation also will be beneficial that helps to capturing customers eyes
toward their goods easily (Kumar and Reinartz, 2016).
Get higher benefits and growth – For a business organisation, it is require to implement
their operational and functional activities effectively to getting higher competitive advantages.
These firm's create their goals and objectives in proper manner to getting higher benefits and
growth as well. For this management of Homebase requires to create impactful strategy to
getting desired outcomes of their business approaches. In this process Customer Lifetime Value
play a most important role to maximise organisation's sales and income. Through this process
Homebase can easily expand their business structure in several countries.
Retention/Win Back of Customers - Customer Lifetime Value method is based on win
back strategy of consumers. In this procedure, different organisations create impactful strategy to
provide quality services to their customers properly. Through this they can easily maximise their
growth and income. For this firm requires to use promotional tools and activities to introduce
their services positively in front of target customers. These type of business approaches
maximise consumer's purchasing power and firm's sales revenue in effective manner (Pearson,
2016).
P3 Factors that affect customer lifetime value
For a firm it is require to create lifetime values of consumers to getting higher
competitive advantages and long term benefits as well. Homebase require to analyse their
customers values to getting appropriate growth by providing quality services to them. To analyse
customers lifetime values, firm can use mathematical formulations that help to analyse firm's net
revenue and income that determine customer's relation with firm. These kind of business
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activities impacts on firm's productivity and profitability as well. There are different type of
factors are determine below that affect customer lifetime value such as -
Firm's objective – For a business organisation it is require to analyse their target goals
and objectives that can be affected by customers demand and need. Main objective behind this
process is to make appropriate modifications in firm's products as well as services. These type of
procedures takes a specific time to adopt several changes in organisational services properly. So
for this require to manage financial resources, strategic process and work effectiveness to getting
long term benefits easily.
Types of product that organisation sell – For a business organisation, it is require to
analyse type of products that they offer in target market. These type of factors can affect
customers lifetime values that can impact on selling and purchasing process. For Homebase it is
require to analyse types of product that they sell and demand of customer. Through this they can
easily make appropriate modification in their services. All these activities helps to maximise
customer's satisfaction level in effective manner (Rihova and et. al., 2015).
Services and promise level – This process contributes in determination of the promises
which are provided by organisation to their customers and services that they exactly provide to
them. Through this they can easily analyse their objective and current services to make effective
modifications properly or as per the users demand. These type of activities can impact positively
and negatively on firms image and goodwill. So for this firm require to offer effective and
impactful products to their customers on the bases of their promises.
Market stability – For Homebase, it is require to create market stability to maximise
customers values and their effectiveness properly. These kind of elements create firms market
image and values to getting long terms benefits easily. Through this Homebase can maximise
their effectiveness and goodwill with specific positioning. Unstable organisations can reduce
their market values and customer lifetime value as well (Schwepker and Schultz, 2015).
Changes in technology – In this new era, advance technology has vast impact on several
business organisations. So for this Homebase requires to adopt innovative ideas and
digitalisation to provide effective and impactful services to their customers. Now a days each
customer is demand for attractive and advance feature products that provides higher satisfaction
to them. So for this, firm requires to adopt these new features and skills in their business
activities to getting higher and desired benefits.
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Social factors – for a business organisation, it is required to analyse their customers
demand and need to provide them appropriate products and services easily. These kind of
activities impact on business approaches and its sales procedure.
TASK 2
P4 Types of Market Segmentation Strategies applied to customer base
Market segmentation is a appropriate procedure that used to classify customer and market
into different elements on the bases of age, choice, demand, interest and trends that affect their
purchasing procedure. This determine a effective process in which organisation opt a specific
term to provide higher satisfaction to both market and customers in appropriate manner. In this
Homebase requires to analyse values of their customers and their demand to provide them
effective and quality products easily (Stark, 2015). In this, employees of firm requires to adopt
different strategies and techniques that impact positively on target market. Through this company
can easily develop their goodwill and market image. These segmentation process will be
beneficial for Homebase to getting long term benefits easily. This process consider three
different steps such as -
Segmentation – In this process, organisation analyse their customer's demand and need
to provide them effective and quality products easily. For this Homebase requires to use effective
and impactful strategy to serve quality products to them as per their requirement. These kind of
segments provide effectiveness in firm as well as desired growth or potential growth.
Segmentation basically used to analyse individual's requirement toward several services that
provide them higher satisfaction easily.
Targeting – in this process an organisation require to analyse appropriate target and
goals that they want to achieve in future through their effective business process and strategies.
For this they require to adopt creative ideas and thoughts to implement them in business
procedure (Weinstein and Pohlman, 2015).
Positioning – For Homebase, it is require to analyse their own marketing place and
image that can impact in their business structure. These kind of activities used to provide higher
satisfaction to customers by using different type of plan and strategies as well. All these activities
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has different impact on business and organisational activities. Main objective behind these
services to maximise customers lifetime values properly.
Procedures of segmentation base:
Demographic – This segmentation process is based on appropriate analysis which is
based on different factors as gender, age, caste, religion of people. These kind of activities helps
to collect appropriate data about population, different segmentation and specific feature as well.
For Homebase it is required to provide effective and quality services to their customers on the
bases of their requirement and need as well. For providing information about several services,
firm uses SMS and email services that has positive impact on them (Xu, Peak and Prybutok,
2015).
Psycho-graphic – These kind of demands of customers are based on their personal need
and lifestyle approaches. For this organisation require to provide cost effective products to their
customers to getting higher growth and income.
Behavioural – These kind of approachers are based on customers behaviour for
purchasing specific products and services.
P5 B2C and B2B decision-making models and demonstrate which is used to get opportunities
B2C and B2B decision-making models is a effective business approach that used to
maximise organisation's structure and market values properly. These kind of techniques are uses
by different organisations as a promotional tool.
Decision Making Models B2C B2B
Rational/Classical Model These type of strategies are
basically uses by different type
of organisation to build direct
connection with them through
specific services. In this
employees of organisation
build direct connection with
their target customers to
resolve their issues and
problems in effective manner.
In this process organisation
uses different types of
promotional tool to build their
direct connection with business
organisations. These activities
are adopt by large scale
organisations to maximise their
business structure by build a
strong connection with new
organisations in effective
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Main objective of this process
is to introduce new services
directly to consumers.
manner. Through this firm can
easily expand their corporate
structure with target
companies.
Administrative or Bounded
Rationality Model
In this process management of
organisation requires to use
different kind of alteration in
their business model to getting
effectiveness easily. Business
to customers model basically
uses by small scale
organisation to maximise their
structure and activities
properly. So for them it is
require to make appropriate
and impactful alteration in
their business strategy that
provide beneficial outcomes to
them.
These type of business
activities are beneficial for
different business
organisations that has large
structure and wants to expand
their business properly.
Through this process they can
easily grab several
opportunities from target
market to provide their
effective services easily and
getting higher business
approaches (Xu, Peak and
Prybutok, 2015).
Retrospective Decision-
making Model
This is a impactful
promotional process in which
organisation introduce their
services in front of target
customers to increase their
trust toward organisational
services.
In this process employees of an
organisation build direct
connection with target business
to getting long term benefits
easily.
TASK 3
P6 Different techniques and methods an organization can apply to increase customer relationship
For Homebase, it is require to build strong relation with target customers to getting long
term benefits easily. In this, they requires to use several process and methods that maximise
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customers values and firm's growth in effective manner. There are different techniques and
methods are determine that used to increase customer relationship such as -
Cost reduction process- Homebase requires to use cost reduction method to capture
customers eyes toward their services. All these activities helps to increase customers relation
with organisation for a long term period. This method increase customers purchasing power and
firm's growth effectively (Xu, Peak and Prybutok, 2015).
Quality management – For a business organisation it is require to manage quality of
their products to increase customers loyalty toward organisation. Through this firm can easily get
higher growth and maximum sales in market. These kind of methods used to maximise brand
loyalty easily.
Promotional activities – Homebase requires to use different marketing and promotional
tool to introduce their new products and services in front of target audience. These kind of
activities maximise firm's growth and profitability. Homebase can use different promotional
tools as Advertising, price management, internet variations, paper media and electronic media as
well.
Homebase can be used different tools and techniques to maximising customer's loyalty
for their organisation. For this, firm requires to use different methods to build effective relation
with their service users. These tools can be -
Internet – Now a days, each and every individuals is using internet to get the instant
news about the different aspects which are happen worldwide. It is seemed that important role is
played by the internet services to make instant relationship with customers. In this regard, Cited
organisation has the opportunity is to use their official website through which they can
disseminate information about their offerings in effective way along with terms and conditions.
This method helps in providence of visual presentation of their products which are provided by
them in actual in market.
Telephone – This is another medium which includes telephonic conversation with
customers to provide the information about features of product. The effectiveness of this method
is not much wide as comparison to internet option.
SMS – This includes about providence of information trough using the tool of SMS. The
effectiveness of this method in relation to make relationship with customers is low in all the
above mentioned three methods.
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CONCLUSION
As per the above report it has been summarised that customers play a most important role
in an organisation who helps to maximise firms sales and growth effectively. For them firm
requires to use different marketing tools to analyse customers and market demand properly. This
project report is based on Homebase which is a British home improvement retailer organisation.
This projects represent customer's lifetime value, its advantages, market segmentation, B2B and
B2C decision making models and techniques to increase customer loyalty and relationship.
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REFERENCES
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