Customer Lifetime Value and Market Segmentation: Homebase Report

This report provides a comprehensive analysis of customer value management, focusing on the application of these strategies to Homebase, a UK-based company. The report begins with an introduction to Customer Lifetime Value (CLV), detailing the components enabling its calculation and its benefits, such as effective customer segmentation and better forecasting. It also explores factors affecting CLV, including product quality, service levels, market stability, and company objectives. The report then delves into market segmentation strategies, including demographic, geographic, psychographic, and behavioral approaches, and how they are applied to Homebase's customer base. Furthermore, it examines the B2B and B2C models of decision-making and value creation opportunities. Finally, the report discusses various techniques and methods to increase customer relationships and loyalty, providing actionable insights for Homebase to enhance its customer value management practices and improve its market position. The report concludes by summarizing the key findings and recommendations for Homebase to optimize its customer-centric strategies.

Customer Value Management

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Components that enable determination & calculation of customer's lifetime value.........1
P2 Benefits of Customer Lifetime Value...............................................................................2
P3 Factors that affect customer lifetime value.......................................................................3
TASK 2............................................................................................................................................4
P4 Types of Market Segmentation Strategies applied to customer base................................4
P5 B2B and B2C models of decision making and opportunities value creation can be applied 6
TASK 3............................................................................................................................................8
P6 Different techniques and methods can apply to increase customer relationship and loyalty 8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Customers are considered as end user of any product and services and to provide them
maximum satisfaction, it is required for company to know about their needs and wants (Keyte
and Locher, 2016). It is required to value those feedbacks which are provided by them; thus,
issues will get resolved. This assignment is based on Homebase which is set up in UK. Company
has to analyse customer lifetime value and their factors; thus, they will promote appropriate
working. This project will going to evaluate about the various consideration and components
which enable in determine the customer lifetime value. There will be various future and long
term benefits are associated with the customer lifetime value so that better and effective gain
could be impose properly. There will be certain number of factors get underpin which impacted
the customer lifetime value at some extent.
TASK 1
P1 Components that enable determination & calculation of customer's lifetime value
Home is utilizing an essential techniques which is known as Customer's lifetime value.
With assistance of this, forecasting will be done; therefore, an appropriate relationship with
clients will be created (Kerzner and Kerzner, 2017). In this manner, long term relations will be
maintained. Company has to calculate CLV because with help of this periodical value will be
identified between users and firm. Elements which are related to this:
Present value: This kind of rate is related to continual purchasing behaviour of clients. It
is termed as discounted rate associated with cash flow. With support of time value of money
(TVM), it will be determined.
Customer Loyalty: If company is providing best quality of products to clients then this
will help them to retain loyal for firm for maximum period of time. But if they are less satisfied
then, purchasers will switch to other brand. Therefore, it can be understood that loyal individuals
aid to render benefits to affiliation. This assists to increase revenues and productivity (Kumar
and Reinartz, 2016).
Mathematical formula: BY calculating CLV, superior of Homebase will take an
effective decision. There is a specific formula for this:
Formula: Total profit/ number of months since client joined
With aid of this, average profit will be found out and instead of this, another formula will be
used:
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CLV: ((T*AOV) AGM) ALT
here, T: Average monthly transactions
AOV: average order value
ALT: average customer lifetime (in months)
Details:
Here, R: Monthly retention rate
D: Monthly discount rate Cohort analysis: This is group evaluation of persons whose characteristics are much
similar to each other (Nyadzayo and Khajehzadeh, 2016). Therefore, they will analysed
through same technique. Fundamental advantage of this, it takes minimum time. Along
with, difference will be common which affect customer lifetime value.
 Individualized CLV: With assistance of this, adequate examination will be done because
it aids to concentrate on every individual's behaviour and their attitude. For above stated
aim, previous and present information will be utilized.
Relationship marketing will assist company to maximize lifetime value. Everest Home
Improvement is using this method and as Homebase is operating their business in same sector;
therefore, they will use it because it enables them in improvisation of revenues and maintaining
customer base effectually (Pearson, 2016).
P2 Benefits of Customer Lifetime Value
In recent time, it is fundamental for each organisation to pay maximum attention to
identification of CLV. After this, positive results will gained by an enterprise and they will also
utilize this method into operational activities (Zhang and et. al., 2017). It provide growth and
development to an association and they will increase their revenues. There are certain advantages
related to this mentioned as below:
Effective customer segmentation: An enterprise will classified customers into various
segments; therefore, they will fulfil their desired properly. For this, CLV will be utilized by
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them. If firm is able to satisfy them then, in this manner they will maintain profits and reputation
in market (Homburg, Jozić and Kuehnl, 2017).
Price setting: With assistance of CLV, manager will decide price of items and services.
By setting an appropriate value they will obtain competitive benefits at marketplace.
Better forecasting: This will help to identify future needs and demands regarding any
product. By formulating an appropriate plan they will get positive outcome. In relation to
Homebase, they decided to introduce CLV matrix for overall sales employees; therefore, they
will examine every client's relations. This will help them in increment of revenues and market
share. Along with, they will easily take benefits from their contenders, like Everest Home
Improvement (Hsiao, Chang and Tang, 2016).
Re- invent royalty of management:This has been analysed that, CLV will help to
company to determine those activities which required improvement. Thus, they will be able to
maintain quality of items and services in an effective manner. Customer lifetime value will assist
superior to know purchasing behaviour of people. Along with, Homebase will easily take an
effective judgement for business.
There are some other benefits related with this, discussed as beneath:
 Help to align marketing sessions with financial goals (Eichorn, 2017).
 Identify investment level in various activities, such as marketing, sales etc.
 Motivate company to maintain long term relationship with clients.
Henceforth, Homebase is using Customer lifetime value as this helps them to find out
upcoming opportunities. This enables them to maintain their operations in an appropriate manner
and in addition they will be able to enhance production.
P3 Factors that affect customer lifetime value
Marketing manager will use customer lifetime value as this enables them to identify
purchaser's expectations; thus, firm will accomplish it effectively. This will aid them to take
judgement in relation to customer support, item enhancement, supply chain management and so
forth (Navimipour and Soltani, 2016). There are many components which will provide impact to
customer lifetime value and these are described as beneath:
What type of product you sell: If qualitative items are offering by Homebase then, it
assists to gain trust and loyalty of buyers and as a result, they will maintain long term
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relationship with them. On the other hand, if they are not fulfilling their requirements properly
then, they will switch to some other brand.
Service and promise level: This demonstrates that how firm will accomplish promise of
clients by items or services. For an example: if a person purchased car then, they will gain free
service for one year complementary. But if company will not fulfil their commitment then, they
will lose their customer base (Agnihotri and et, al., 2016).
Market stability: It is required for Homebase to analyse demands of users; therefore, they
will accomplish it and take competitive benefits from contenders. In this manner, they will
survive at marketplace for maximum period of time. Along with, they will alter products as per
needs of individual and this assists to gain attention of numerous people towards them. As a
result, profits and market share will get enhanced.
Company's objective: If firm is financially strong then, they will be much confident
about CLV. As Homebase is having requisite fund as comparison to Everest Home
Improvement; thus, they will modify items as per desires of customers. It helps to attain coveted
targets and goals within limited time span (Davies, 2016). Like an example: Apple introduced
iPhone series but by seeing requirements of individual they launched X series; hence, they will
fulfil their wants significantly.
Therefore, above mentioned components play significant role to cater affect to client
value relation. Purchasers are termed as end user of any item so that it is mandatory for an
affiliation to maintain an effective relationship with them.
TASK 2
P4 Types of Market Segmentation Strategies applied to customer base
Segmentation of market demonstrate that firm will classified marketplace according to
requirements and desires of people (McKnight, 2016). Thus, they will fulfil their needs and
wants in an effective manner. This will help an employer to take decision regarding investment.
In context of Homebase, they conduct research so that they will be able to analyse their clients
significantly. Along with, by accomplishing their demands will able to take advantages from
contenders. In this manner, they will improve profits and in addition market share effectually.
This has been examined that market will be classified into various sub sectors, such as
according to person's characteristics. In relation to Homebase, they will divide this into two
segments, one in which individuals are utilizing SMS administrations and other is connected
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with those who are not using it. Henceforth, there are various types of components which are
linked with segmentation of market (Rahimi and Kozak, 2017). It is described as beneath:
Demographic: It is considered as most easiest technique which will be utilized by any
organisation. It can be small, medium and large as well. There are numerous factors which will
comprise into this, for example: education, gender, occupation, marital status, occupation,
income, age and so forth. By doing this type of classification, affiliation will easily cater services
to persons accordingly. If Homebase is having large customer base then, it enables them to
generate maximum profits at marketplace.
Geographic: If manager of company wants to target any specific customers then, this
element will be used by them. For instance: in nation, there will some part where problem related
to network is high so that persons of that place are unable to utilize SMS services. Henceforth, it
is required for regulatory body to improve these areas so people will easily take benefits of each
kind of services (Kohtamäki and Partanen, 2016).
Psycho-graphic: There are many individuals who will comprise into this can be have
same sort of attitude, value, interest, lifestyle, hobbies and many others. Fundamentally, they all
are much brand conscious and in addition rely on a specific brand. Additionally, they want to
maintain their luxurious living style; thus, they will be able to maintain an effective societal
status. There are some attributes which will comprise into this sort of classification. For instance:
interest of customers, attitude, personality, value, belief and so on.
Behavioural: In present era, this sort of partition is using by organisations in wide
manner (Keyte and Locher, 2016). In context of Homebase, they are utilizing digital methods;
therefore, they will render maximum satisfaction customers. It assists to improve quality of items
and services; thus, they will obtain attention of people. In this manner, profits as well as
production of an enterprise will get improved.
Combination strategy: It is termed as collaborate of overall strategies which are
described above. In relation to Homebase, they will use this tool as it helps them to increase their
sales. As a result, they will easily compete with Everest Home Improvement in an effective and
efficient manner.
This is considered as business to customer segmentation and this will render advantages
to firm. Like, it assists to reduce transactional cost and customers will get products and services
quickly and conveniently (Kerzner and Kerzner, 2017).
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P5 B2B and B2C models of decision making and opportunities value creation can be applied
Each organisation has to provide products and services to other association as well as
people. It is must for firm to offer qualitative items and administrations to individuals. They have
to obtain an effective judgement for business; therefore, they will be able to accomplish coveted
targets and goals within limited period of time. It is must for company to take opportunities
which are accessible for them at marketplace so they will improve market share and in addition
maintain clients base (Kumar and Reinartz, 2016).
Manage has to formulate some policies as well as strategies for business because this
helps them to improve operational activities effectually. Along with, it is essential for them to
take an effective decision so that they will take competitive benefits from their contenders in
market. There are distinctive types of models which are associated with decision making and it
can be used by Homebase. This will be implement into business to consumers and business
business as well (Nyadzayo and Khajehzadeh, 2016).
Henceforth, there are some decision making models which will be used by Homebase and
these are mentioned as beneath:
Decision making models B2C B2B
Classical/ Rational Model  To obtain an effective
as well as appropriate
judgement, it is
required for company
to determine
requirements and
demands of people;
therefore, they will
accomplish it within
limited period of time.
 It is required for an
employer to examine
entire troubles and
along with issues. This
has be sort out timely,
 This is considered as
most significant
method to conduct
business and they will
use an appropriate
model to take proper
decision.
 There are minimum
circumstances of
problems and in
addition, it is not easy
to run B2B in an
effective way.
 This has been analysed
that, in this kind of
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otherwise it can
hamper overall
operational activities
either in a direct or
indirect manner.
 Management
department of an
enterprise has to set
objectives or goals
which they want to
attain. Fir above stated
aim, certain policies or
approaches will be
used by them. Thus,
this model will apply
into affiliation in an
effective way.
firm, people are not
much familiar with
goals and objectives
which they need to
attain. They will easily
replace any big
enterprise as well.
Bounded Rationality or
Administrative Model
 In this, it is required for
an enterprise to
determine objectives
which they have to
attain in limited time
span.
 Manager has to identify
some other options;
thus, they will done
work with maximum
effectiveness.
 In this, entire power is
in the hands of higher
authority. They have to
obtain judgement for
business; thus, coveted
targets and goals will
achieved within certain
time span.
 There are numerous
alternatives are
available for superior
and it is much difficult
for them to examine
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each tool.
TASK 3
P6 Different techniques and methods can apply to increase customer relationship and loyalty
It is required for an organisation to utilize distinctive kinds of methodologies as well as
tools; therefore, they will easily maintain an effective relations with clients. This will assist them
to obtain best and positive results (Pearson, 2016). In context of Homebase, they are offering
qualitative services to each customer which aid them to accomplish their needs and wants in
proficient manner. It helps them to take benefits from contenders in market. Along with,
organisation is giving numerous types of facilities which help them to acquire thoughts or views
of many clients; as a result, effective working will be done by them in a proper manner.
Furthermore, manager will apply various activities because this assists them to improve
or maintain customer base effectually. To maintain sustainability at marketplace for maximum
period of time, they need to gain trust as well as loyalty of individuals. This will help them to
maintain long term relationship with clients and as a result, they will take benefits from
contenders in market in a significant manner. It assists them to attain desired objectives and in
addition goals within limited period of time. Superior of firm will analyse demands of people and
modify items and services accordingly. In this way, they will easily retain clients for maximum
time span and they will capture attention of numerous people towards them (Zhang and et. al.,
2017).
Henceforth, many types of methods as well as tools will be utilized by administrative
department because it enables organisation to acquire best and positive outcome. It enables an
enterprise to maintain an effective relations with clients. Thus, distinctive kinds of techniques
and methods will be applied to enhance customer relationship and loyalty and these are stated as
beneath:
E- mail: Customer relationship management is termed as most significant method which
is using bay every kind of company. Because it assists them to maintain an appropriate relation
with clients. To keep up it for maximum period of time, manager will take feedback from their
buyers. This will help to gain more trust as well as loyalty of people. Henceforth, this is
considered as foremost element which help an organisation to maintain connection with clients
(Homburg, Jozić and Kuehnl, 2017). With assistance of this, superior will convey about products
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and services to purchasers. Therefore, they will buy items accordingly. Everest Home
Improvement is using this techniques so it can be used by Homebase as well because it will help
them to improve conversation with their users. This will help to maintain customer base for
maximum period of time and along with they will increase revenues (Tools of customer
relationship management, 2018).
SMS: This is considered as an another element which will be used by an affiliation;
therefore, they will be able to maintain appropriate relations with clients (Hsiao, Chang and
Tang, 2016). Manager of an association will get feedback from their buyers regarding their
products and services. Along with, with support this, they get know about those area which need
some improvements. SMS will help to maintain an appropriate relationship with customers.
Through this, individuals will know about new offers, discounts and products as well. As a
result, they will increase profits as well as market share in a proficient manner.
Instead of this, some other tools will used by Homebase also as this will help them to take
benefits from rivals i.e. Everest Home Improvement. For example: social sites like Instagram,
Facebook, Website, Advertisement and many others (Eichorn, 2017).
Above mentioned techniques are considered as more important because this enables
affiliation to improve loyalty and customer relationship. This will aid them to attain desired
targets and goals in an effective manner. Along with, they will increase sales and in addition
production by satisfying their requirements within limited period of time (Navimipour and
Soltani, 2016).
CONCLUSION
It get concluded from the project that customer value management is a major task which
used to determine by an organisation properly so that better rand supportive working could be
done. There are various components could be utilise which enable and support business to
maintain and manage the customer lifetime value which emphasise better and effective gaining.
Business used to formulate such strategies which used to support in manage the influential
factors of customer value management. There are various market segmentation used to adopt by
business which enable in determine the customer lifetime value properly.
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REFERENCES
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usage of mobile social Apps: Satisfaction, habit, and customer value
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<https://www.google.co.uk/searchq=tools+of+customer+relationship+management&so
urce=lnms&tbm=isch&sa=X&ved=0ahUKEwiJtLCxlZHZAhVDuI8KHWVwArkQ_A
UICigB&biw=1319&bih=604#imgrc=xArC8dJ25vAzfM:>.
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