Analysis of Customer Value Management Report for Homebase

This report provides a comprehensive analysis of Customer Value Management (CVM), focusing on Customer Lifetime Value (CLV) within the context of Homebase, a broadcasting provider. It begins by defining CLV and its components, including present value, customer loyalty, and mathematical formulas, and then explores the benefits of CLV, such as effective customer segmentation, better forecasting, and improved price setting. The report also examines factors affecting CLV, like product type and market stability. Furthermore, the report delves into market segmentation strategies, differentiating between B2B and B2C models, and how they can apply to value creation. Finally, it discusses various techniques and methods to increase customer relationships and loyalty, especially within the context of Homebase's SMS service. The analysis includes references to relevant literature and provides insights into how Homebase can improve its business activities and achieve its profit goals by enhancing customer value and loyalty.

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...............................................................................3
P3 Factors that affect customer lifetime value.......................................................................4
TASK 2............................................................................................................................................6
P4 Types of Market Segmentation Strategies applied to customer base................................6
P5 B2B and B2C models of decision making and opportunities value creation can be applied 8
TASK 3..........................................................................................................................................10
P6 Different techniques and methods can apply to increase customer relationship and loyalty
..............................................................................................................................................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Customer value management is a concept that helps in keeping record of all information
related to value that is persist by consumers whom are regularly and sometime visit corporation
to make purchases. This is a model that is helpful in studying profitability that is linked with all
customers of company separately, overall. In this portion, monetary values which are associated
with clients is to be calculated (Jung Choo and et. al., 2012). Very most important reason and
method of increasing values of customers are serving them extraordinary quality goods and
services. Current report pays attention on Homebase company which is a broadcasting provider
corporation and wants to make some improvements in business activities so that profit could go
on hike of at least 20%. To hit this goal, firm is now focusing its weak service which is SMS.
This service of organisation is in weaker position and has to get improve, in order to maintain
and attain all growth goals.
TASK 1
P1 Components that enable determination & calculation of customer's lifetime value
Homebase company is using a current trend which is helpful in predicting value that a
business firm drives from him or his clients and name of that tool is customer lifetime value.
This term is defined as overall value from starting to end means till customer leaves purchasing
from corporation. Nobody has idea that how long and how far a relationship will go with
company of a consumer. This type of estimation needs calculation of customer lifetime value.
This term is stated as a periodic value that is possessed by customer while becoming customer of
Homebase company. This situation is comprehended as one example and this e.g. is, if a
customer is linked with association from past 18 months and are making regular purchasing on
short term basic then value of this period is £x.
There are many factors that affect determinants of customer lifetime value and details of
these aspects are stated as beneath:
Present Value:- This is elaborated as a definite term which is a rate of repetitive
purchases from a single business firm. This is a discounted rate of cash flows which is generated
through present customer base. Main tool that is to be use in calculation of CLV is time value of
money as entire customer lifetime value relies upon time duration that is an entire life of bond of
customer and association.
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Customer Loyalty:- Customer value management is a terminology that depends upon
overall customer loyalty. More loyal a person is than CLV is higher and on the other hand less
loyal customer possess lesser value for corporation. For instance, a client is loyal and satisfied
with offerings of company then customer lifetime value is high and apart from this, if other
customer does not found satisfaction with services of Homebase company then this type of
customer could not be a regular or loyal clients for association. To enhance CLV, company can
provide better quality services to specially those consumers whom are not satisfy with company's
services.
Mathematical formula:- There are some professional experts whom are able in
calculating customer lifetime value by applying mathematical formula. Main advantages of this
method is that it provides a certain result that is helpful in making effectual decisions for
corporation. There are multiple factors which is to be comprised in mathematical format and
these are clients, total revenue, period of linking of company and customer etc. For example, it
could be calculated as Total revenue ÷ Number of months since customer joined. Main section
of this formula is average of revenues generated by consumer. Average of revenues are quite
accurate number and organisation can consider it in efficient decision making. There are some
different formulas are present in order to calculate customer lifetime value, like:
 CLV = ((T x AOV)AGM)ALT
Here; T = Average Monthly transactions
AOV = Average Order Value
ALT = Average customer Lifespan (in Months)
◦ in Detail:
Here; R = Monthly Retention Rate
D = monthly Discount Rate
Cohort Analysis:- This is a study of a group of people that shares same type of character
attributes which is a base for group formation. In context of this, cluster is that whom are
comprised in this group will be analysed at the same time in respect to get the value of entire
lifetime that a consumer has with enterprise. Main fruitfulness of this terminology is that it does
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not consume heavy amount of time and produces more accurate results in minimal efforts. This
method calculates more that one variant at the same time.
Individualized CLV:- This has its more importance when company wants to pay attention
on single customers because this method gives more accurate and correct result that is helpful in
decision making. This formula depends upon attitude and behaviour of customer that he/she
brings with his/her herewith their arrival. Main basis point of this method is present and past
database of Homebase company. This data also provides aid in developing presentations.
P2 Benefits of Customer Lifetime Value
In modern era, there are many firms whom are started paying attention on calculation of
customer lifetime value but there is a debate is present on this value. After analysing estimation
of this value and if company gets positive results then management of corporation feels
usefulness of this concept of customer value management. After conducting this event,
association starts using this tool in accomplishment of business operational activities.
Conceptualisation of customer lifetime value affects growth and profit generation of firm in
positive manner. This action improvises goodwill of venture in marketplace and provides aid in
making company as a brand. Those corporations which want to stand apart from range of
competition in same industry are use this tool because this is a novel method in context of
making business house popular. By taking aid of concept of customer value management, firm
can improvise their productivity. There are some benefits which are associated with
methodology is explained as under:
Effective Customer Segmentation:- CLV helps operational activities of business by
recognising segments of customers along with profile because after getting appropriate
information about clients needs and wants then line manager can produce accurate number of
products and services by using appropriate tools and methods in production function. This
technique sketches an image of consumers about their potentiality whether they are potential or
not.
Price Setting:- Customer's lifetime value is helpful in deciding a prominent price of
services that are provided by Homebase company to their clients in market after analysing taste
and preferences of customers. This type of activity aids in attaining all targets in limited time
duration in addition with getting competitive advantages.
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Better Forecasting:- This technique is helpful in making identification of most potential
consumers in marketplace by calculating their estimated lifetime with association after
estimating future demands of purchasers and then this action provide aid in personnel marketing.
By conducting this action, company can develop a right plan for execution of business
operations. Homebase company wants to their profit with 20% by making some needed
improvements in SMS service. Customer lifetime value is helpful in identifying actual status of
clients that whom are using this SMS service with how much interest and on the other hand if
people are not using this then what is the reason behind this. By applying this tool, corporation
can grab market opportunities by finalise requirements of association.
Re-invent Royalty of Management:- Customer lifetime works as indicator need of
improvements in business activities in order to produce extraordinary quality services which are
responsible for attracting more consumers and upon this action, loyalty of customers depends.
This section enlightens those arena which are showing need of improvisations like in context of
Homebase, area of improvement is SMS services which is a weaker section of corporations and
association wants increase in sales by 20% of SMS.
Retention/Win Back of Customers:- Customer value management is a concept that is
helpful for Homebase company by deciding current and future potential of SMS services like
growth in further time and current using of company's offering. By recognising need and wants
of customers, corporation can make those services which are helpful in winning heart and
attention of consumers on regular basis. This action is helpful in addressing actual need and
desire of consumer.
Homebase company utilises customer lifetime value in order to predict future
opportunities and this type of action is helpful in estimating how long a bond between company
and client will go in industry. Customer lifetime value is a valuable tool as it provides assistance
in gathering accurate data which is useful in enhancing functionality of business operations for
retaining and fascinating clients for longer period of time (Beckers Risselada, and Verhoef,
2014).
P3 Factors that affect customer lifetime value
Customer lifetime value is a concept that was developed to identify lengths of
relationship between customer and association. This is a fruitful technique in context of
marketing activities as it provides aid to marketing manager in analysing all customer base in
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order to find out loyal clients of association. This type of behaviour of taking aid of different
tools and techniques of marketing behaviour is useful in taking appropriate decisions which
improvises quality of services. Customer lifetime value is an effective tool and organisation uses
this to find out comprehend level of loyalty of consumers and this method also aidful in
identifying how value of customers will vary as per time passes. By taking aid of this
methodology, corporation can found the loyalty of consumers along with their contribution in
profit generation of firm and up-to what extent (O'cass and Ngo, 2012).
Factors affecting Customer Lifetime Value are described below:
What type of product you sell: Consumers maintain strong and long relationship with brand as
these companies consist adequate brand equity. Main reason behind stronger bond of consumers
with brands are this corporation is having those products and services which are able in meeting
consumer demands with highest satisfactory level. If association fails in delivering good quality
products and services which are not able in satisfying client's needs then this action would be
converted into brand switching and this is a market opportunity. For instance, Product life cycle
of telecommunication services are limited to extent in case of Homebase company.
Services and Promise Level:- This section deals with how corporation's products and
services are living their promises. For example: when a customer purchases any SMS service of
Homebase company and then after client feels that company is struggling with network issues
and due to this reason are providing poor quality service which is responsible for weakness of
SMS service of Homebase company (Beneke and et. al., 2013).
Market Stability:- Market conditions are rapidly changing and in this variable
marketplace association has to identify present needs and wants of buyers. Rapid and fast
changes in taste of clients enable a corporation in making improvements in business operations
in order to provide high quality services to consumers in telecommunication industry. This
situation is more understood by an example which is; British Telecommunication is having
largest pool of customers and Vodafone is a competitor of BT company in market of United
Kingdom. Reason behind high rivalry between both corporations are that Vodafone is providing
comparatively low data plans which makes many people able in using this is an enough reason
for company switching. In order to reduce range of competition BT company has to revisit their
data plans and need to make some relevant changes in it (Servaes and Tamayo, 2013). This
5

situation shows that how loyal customer changes their company in order to get some additional
benefits. This situation is helpful for other company as this is a market opportunity.
Company's Objectives:- Those associations whom are financially strong and have good
command in strategies formulation than this kind of ventures have confidence in their customer
loyalty along with their lives with venture. Firms which have adequate financial resources then
they can modify their products and services according to change of client's needs and wants. For
example; in earlier time operating system was mobile phones were low and because of this
reason company was not able in sending delivery reports of messages and nowadays operating
systems are becoming faster and this actions is able in fastest delivery of messages and this
activity makes SMS service more relevant and prominent (Ryu, Lee and Gon Kim, 2012).
Above stated factors are those elements which are having their impact on long term
relationship of company and its client. Customers are considered as king of market and
consumers are main operators of market activities and conditions. It is required from every sort
of association whether big or small that all above factors should be analysed in critical manner so
that negative and positive result could be examined very efficiently. This type of behaviour is
helpful in winning back and fascinating new clients towards Homebase company in market.
TASK 2
P4 Types of Market Segmentation Strategies applied to customer base
Market segmentation is defined as distribution of marketplace according to some basis
like age, gender, income level, user of mobile, techno-friendly etc. This action is done for
decision making which is necessary in order to find out number of potential buyers and users of
mobile phones. Segmentation is done for finalising those clients whom firm can address for their
services. Main cause of market distribution is to recognise those persons whom could be
converted into target customers. By taking help of this action association can gain larger market
share along with greater profit generation (Leroi-Werelds and et. al., 2014).
Segmentation of market is sentenced as partitioning of market into sections and sub-
sections of market and this thing relies upon those human beings whom are possessing same kind
of skills and aptitudes. Now this is a responsibility of marketing manager that he/she should
recognise those customers who use SMS services and others. This type of market partitioning is
aidful in making right decision upon potential buyers. Main objective of this function is to
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getting information about sales would be increased or not. There are many tactics those are aidful
in utilising to divide market or population. These points are explained below:
Demographic: This is a very much common and easiest pattern to make portions of
market. In order to accomplish all tasks in most appropriate manner each and every kind of
corporation does this whether small association or big. Population is segmenting on the basis of
some personality traits which are common or quite similar in group. Main basis of partitioning is
age. Gender. Religion, cast, marital status, technology user etc. With assistance of this function
company can provide information to their line workers that how much manpower has to produce
with which extent of quality (Keyte and Locher, 2016). By taking help of market partitioning,
Homebase company is making decisions on potential buyer whom are capable in making
company's weaker services into strong one because association is wanting some increment in
SMS services by 20% and market segmentation is more prominent technique. If number of SMS
users are more them manager of corporation can thing to develop this service. On the other hand,
if number of potential buyers are less, than development of service is losable decision for
organisation.
Geographic:- When market segmentation is divided according to geographical area then
it is called as geographic partitioning of market and this sectioning could be done on the basis of
particular region. This type of sectioning could be understood with one instance. For example, a
region is finalise by company which is having potential buyers whom could be transform into
actual purchasers but this section of market always show network issues and due to this reason,
association can not make nay judgement upon finalising geographical region.
Telecommunication industry always gets impacted by geographical area. As solution, before
developing service, it is required from association that they should sought out problem of
network issues so that SMS services could become more prominent (Martelo, Barroso and
Cepeda, 2013).
Psycho-graphic: In this section, those points have to be comprised whom are sharing
same type of personality traits and attributes like hobbies, type of nature, interest etc. This type
of market sectioning depends upon choice of brands, fashion, attractiveness of product instead of
quality etc. In this segment, people are comprised on the basis of their thought process which is
not conservative and individuals are working for maintaining their luxurious life. This portion
includes that social status, sort of personality, zest of consumers, attitudes and beliefs & values.
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Behavioural: This is a fresh concept in the sector of market segmentation. Current time
is age of modernisation and anything could be done by taking help of technologies and digital
equipments. This type of market segmentation could be done on the basis of reports, surveys or
trends. In this point, manager can also take sensitivity of price, loyalty of brands and benefits
into considerations for further division. People whom are using same level of techniques are
combined in same group and company can find rate of technology users on the basis of this
function.
Combination Strategy: This is a combination of all above methods and generally
organisation does, this type of market segmentation in order to find actual numbers of buyers
whom have adequate zeal to purchase services of Homebase company. By taking help of this
section association can increase their sales volume by at least 16-18% and other thing depends
upon quality of service without any other networking issues (Stark, 2015).
P5 B2B and B2C models of decision making and opportunities value creation can be applied
There are two type of business decisions which provides direction to operational
activities of organisation that are named as business to business and other is business to
consumer. Judgement development relies upon these two kind of functions. Homebase company
is seeking for appropriate decision making system which should be helpful in making
improvements in effectiveness of business functions. In this section, there are three type of
decisional models are explained which Homebase could apply in their business to business and
business to consumers. These models are described below:
Decision Making Models B2C B2B
Classical/ Rational Model  This is a traditional
approach which is
adopted by corporation
is to take better and
efficient decisions.
 Business to consumer
is a traditional type of
business which utilises
rationale model for
 This is a novel concept
of conducting business
activities that are
related to many
functions of business.
This section does not
contains models of
judgement developing.
 In this case, issues and
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developing an effective
decision.
 This segment is
advantageous for small
scale firms which is
having clear aims and
objectives.
problems are very
complicated and hard.
 This is a difficult scale
business activities and
also does not have
proper objectives for
corporations.
Bounded Rationality or
Administrative Model
 In this method,
judgement
development comprises
attainment of targets.
 In decision making,
decisions makes should
consider all available
alternatives and it is
required for him to
present all these
aspects.
 B2C segment is ideally
applicable for small
and moderate size of
firms and in this case
number of alternatives
are also minimum. In
respect to this,
managerial personnel
need to examine all
alternative factors in
most appropriate
manner.
 In this segment, there is
an participation of top
level management in
order to formulate
better decision making
related to achieving
goals and aims in a
systematic manner.
 There many alterations
available but these are
difficult to get examine
by manager of
corporation.
9

Retrospective Decision-
making Model
 Under this section,
organisation tries to
convince customers to
buy items and services
of corporation which
firm is providing at
feasible rate.
 Businessman does not
need to visit any place
in order to sale
products and services
and in case of
Homebase, employees
of this venture not need
to go anywhere as
consumer will come
themselves for making
purchases.
TASK 3
P6 Different techniques and methods can apply to increase customer relationship and loyalty
There are multiple tools and technologies which are used by association in order to make
increments in customer base and at the similar time association can also improvise their level of
profit margins. In respect to Homebase, company is offering SMS services which has been
obsolete in today's internet world because people use other apps for sending messages that is to
be operated by internet. Due to this cause, company is having less competition in market because
other firms are not interested in serving short message services to their clients. It is required for
management of business firm that it should apply some relevant tools and techniques that could
enhance their sale of SMS services in industry (Aarikka-Stenroos and Jaakkola, 2012).
Apart from this, manager of the company use appropriate tools and techniques which
may leads in improving customers relationship. This will increase strong customers base within
the organization. In addition of this, customers are the important term as well as asset for every
business organization in which they but company products and services which directly contribute
in increasing overall sales at market place. In this context, there are some effective
methodologies to enhance customers services are as follows:
E-mails: It is one of the important element for every business organization to manage
better customers relationship which may leads in increasing the chances of attaining better
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growth level at market place. By using this, company establishing strong relation with their
customers. In this company send and receive emails from their clients in order to achieve their
views and opinion. It can be electronic mail in which customers deliver their message and
information. Basically it is quick process in which if customers have any issues and queries
towards the company products then they easily send message. This process take short time of
period which helps in accomplishing better relationship. In case if company revert the customers
then they feel that they are important for the company which may leads in enhancing their
satisfaction level. Thus, this will aid in creating customers base and at the same time also capture
larger market share.
SMS: In previous years, this service was used to do indirect communication where a
human being used to send text messages to others in order to convey thoughts or to share
feelings with each other. This can be stated as much similar to e-mailing. It differs from e-mail
as it do not requires internet. Along with this, it has been examined that firm's employees can
communicate with consumers and with employers as well in order to convey their thoughts.
Feedbacks can be given by customers by using this tool.
Telephone: It is an essential and two party communication in which dual people can
attain at limited period of time. Through these both persons can solve conflicts easily along with
that take immediate solution for another person. Generally, it is having a broad network which
define fast action and solve problems in a very short period time. By this organisation easily
make good relations with their consumers.
Internet: According to present scenario, various numbers of peoples are using social
websites in a entire world as it is a network of worldwide. Generally this kind of strategies is
effective for enterprise to introduce better relations with various number of persons. By this
firms they can easily enhance their services by online websites to give their appropriate
information to huge number of buyers in an proper manner. It assist in improving the level of
performance at the particular time as well as raised consumers base of the organisation at a place
of market.
Thus, all these all these methodologies used by Homebase for creating customer base by
effectively communicate with them. With the help of this, company easily attain competitive
advantage which may leads in capturing marker share from its competitors a market place.
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CONCLUSION
This report is summarised as managing customer base by calculating consumers lifetime
value. CLV could be calculated by applying more mathematical and non-mathematical formula.
Main objective of estimating this concept is efficient decision making in order to handle more
than one customer at a time. This report also pays attention upon repetitive purchase that clients
make with their favourite company and this type of behaviour of individual persons are aidful in
making adequate judgements in order to make some increments in overall sales volume in
context of venture.
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(Kotler, 2017) (Verhoef and Lemon, 2013) (McColl-Kennedy and et. al., 2012) (Nijssen and
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