Customer Value Management: Analysis of Strategies Report

This report provides a comprehensive overview of customer value management (CVM), exploring its significance in enhancing brand image, increasing sales, and fostering strong customer relationships. The report delves into the concept of Customer Lifetime Value (CLTV), outlining its components, benefits, and the factors influencing it, such as buying patterns, perceptions, and market stability. It presents a formula for calculating CLTV and emphasizes its role in optimizing marketing investments and customer retention. The report also examines various market segmentation strategies, including demographic, behavioral, and psychographic approaches, highlighting their application in identifying target audiences and tailoring marketing efforts. Furthermore, it analyzes the B2B model and techniques for enhancing customer relationships and loyalty, providing valuable insights for businesses aiming to improve customer satisfaction and achieve long-term profitability.

CUSTOMER VALUE
MANAGEMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1.component that determines and calculates customer's lifetime value...............................1
P2. benefits of customer lifetime value..................................................................................2
P3. factors that influence lifetime value of customer.............................................................3
TASK 2............................................................................................................................................4
P 4 Types of market segmentation Strategies.........................................................................4
P5 Evaluating the B2B model and determining the way it helps to decision making............5
P6 Analysing the different techniques as well as methods which an organisation can apply to
increase customer relationship and customer loyalty.............................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Customer value is defined as the perceptions of client about the quality of product or
services offered by an organisation. It also recognised as the tool which can be used by manager
in an enterprise for measuring company performance in the market. Customer value management
is considered to be as the action taken by an organisation in order to change the people
perception about business entity. Another purpose of customer value management is to assist
firm in enhancing the brand image .Customer value management helps business entity in
increasing sales as well as profitability. It also enables an enterprise to develop as well as
maintain strong relationship with customers. Customer value management also support an
organisation in retaining the profitable client for long time. It is also considered to be as an
effective tool which is utilized by manager in an organisation for analysing or recognising the
customer opinion about the perceived value for money.
The present project have focus on developing the understanding about customer value
management and identifying its importance in context of organisation. Study will highlight the
several elements which helps manager in an organisation in determining as well as measuring
customer lifetime value.
TASK 1
P1.component that determines and calculates customer's lifetime value
The customer lifetime value is the important attribute which determines the forecasting of
the net profit retained from the entire expected future relationship of the consumer with the
organisation. The customer value is very crucial in order to retain the customer for a life long
period where the satisfaction factor comes into the role. The satisfactory level of the consumer
leads to the creation of a sense where he wants to retain and uses the product and services for the
lifelong. The retention of the customer is very necessary to make the image of the brand in the
market which is only possible if they may apply various strategies to develop an effective
offering that can provide immense satisfaction which can be the main reason for the first
preference of the customer (Baines and et.al., 2017).
It has certain appeal which is intuitive in nature and required for the marketing concept
because theoretically it represents the worthiness of the customer is aspect of monitory terms and
how much effort the organisation has to spend in order to retain that consumer in the field of
1

direct responsive marketing. The lifetime value is used to identify the judging of the
appropriateness of the aspect related to cost for acquisition of a customer. Advantages can
created favourable environment for the organisation which helps to calculate the customer
equity. The customer relationship management is regarded as the asset for the firm where it has
to invest in order to earn profit. Continuous monitoring on this factor lead to the reduction in the
churn rate and the selling of the products gets increased. It helps to optimise the level of
investment which is done. It provides encouragement to the marketers fro making various
strategies that can lead to the development of the customer department of the firm. It sets up the
basis for the selection of right customer base and also for the decision making in rthe areas of
customer value management.
There is a simple method which is used to calculate the customer life time value which is
(Average monthly revenue which is generated per customer* gross margin generated per
customer ) / Rate of churning per month (Milner and Furnham, 2017).
For example : $100 is spent averagely * 15% margin/ 5% monthly churn=$ 300 LTV
Where churning rate is defined as the percentage related to customer who wants to end
the relationship with the firm in the given time period.
Customer Lifetime value is not a static concept, it is dynamic in nature which is the
output of the strategies which is applied by the marketing department in order to attract, satisfy
and retain various customers. It covers several aspects such as profitability which is obtain
through them which include the profit which is made by serving the customer or related group
for the specific time
P2. benefits of customer lifetime value
Customer lifetime value has a very intuitive appeal in the marketing concept as
theoretically it represents the exact amount of the worth which is related to the consumer in
terms of money which provides an idea to the department of marketing to develop a plan for the
expenditure which has to be done on each of them in order to attain their loyalty and maximising
the satisfactory level of the customer. For creating a favourable responsive marketing
environment it is very necessary to maintain the interest of the customer so that they can gain
maximum benefit from the customer. The value of lifetime provides the basis for estimating the
most appropriate cost for the acquisition of the end user that is a necessary aspect of the
organisation (Ramanathan nd et. al., 2017).
2

Managing the relationship with the customer can be regarded as the most important asset
for the company. It helps to keep a check on various tactics and strategies that can be required
form making the effective plan fr the success of the product or services which is provided by the
firm to the consumer for the satisfaction of their needs, wants and requirement. The marketing
mix modelling simulator uses this concept in order show the true value related to every
customer. It helps to provide proper optimisation of the financial aspect of the firm which uses
the customer as the bases and can be regarded as one of the important aspect for the
acknowledgement of the customer's desire and expectation from the company which not only
provide them opportunity to grow but also make their offerings better on quality aspects. After
acquiring knowledge of the value of each customer various marketers get encourage focusing on
the value for the long term instead of easting money on those who are for the temporary time
period. It provides the proper implementation of the sensitivity analysis for determining the
impact which has been created on spending money on various strategies which can provide
amendments in the plans for better implications. It provides allocation of the resources optimally
for further ongoing activities in the field of marketing for achievement of return in the maximum
possible amount. It helps to measure the loyalty of the customer which helps to determine where
the brand has effective positioning in the market that would definitely provides them very
advantages. It helps to provide natural decision in order to operate the automation of the various
system which is required for the management of the database regarding the customer.
P3. factors that influence life time value of customer
There are numerous variables that can have direct or indirect impact on the mindset of the
life time value of the customer. These factors are regarded as the buying pattern or the related
behaviour, perception of the customer for the services which are offered by the firm. , various
marketing activities, experience which have been already experienced by the customer. In order
to add some more factors which can create attitudinal and behavioural differences among the
customer for the engagement to the various aspects related to ending up the relationship with the
firm. Indulging and useful manner of consumption can create a deep impact on the client's
behaviour. For an example when the customer may prefer to buy products with some more
functional aspects as compared to some property Which can justify their various decisions fro
themselves and even others too. Emotional and some personal factors can alter the choices of the
consumer for buying particular goods or availing any services. Some other aspects can be related
3

to the quality of the product , stability of the market and even the economic stability of the
country like recession or boom of the market can influence the mind that can affect various.
There are certain variables that comprises the ability of the organisation for fulfilling the
commitment related to the deliver of the quality of the gods which is very premium to the end
users. The high level commitment done by the company helps in the reattainment of the
customer for a long time that can create lots of profit which is advantageous for the customer
(Veselova, Tarasova and Kossukhina,2017).
Market stability leads to the increase in the production as the demand of the customer
gets increased which is very important for the organisation in order to maximise the share in the
market and lead to the creation of certain opportunities that can provide benefit in many ways
and not only the to company but the customer as well which leads to building up a strong
relationship. As the customers are really concerned regarding the price which is the most
important influential aspect of the product that can even alter the choice of the customer as they
are very price sensitive and want to avail more in comparison to the payment for the same
TASK 2
P 4 Types of market segmentation Strategies
Market segmentation strategy assist an organisation in identifying the suitable ways for
reaching to the target audience. It also provides business entity an ease in selecting the suitable
market for positioning their products. Market segmentation is defined as the traditional approach
in which the complete market is categorised into small segments. It helps an organisation in
attracting more number of customers. This strategy also supports firm in expanding business ,
increasing sales as well as profitability (Allaway, D’Souza, Berkowitz and Northington, 2017).
Market segmentation strategy is formulated by manager in an enterprise with the intention to
drive firm towards achievement of marketing objectives. It also helps an organisation in
increasing market share and fostering growth. Market segmentation strategy is considered to be
as the most crucial part or constituent of marketing plan. The purpose of implementation of
market segmentation strategy by manager in an organisation is to provide high level of
satisfaction to client.
Market can be categorise into small parts on the basis of behaviours of customers ,
demographic factors , geographical region etc. It is required by marketing professional in home
base company to execute or facilitate market survey. As this strategy will assist an enterprise in
4

recognising the needs as well as demand of customers. It will also support firm in analysing the
perception of customers about business entity.
There are several strategies or techniques which can be utilised or adopted by the
marketing manager in Home base company. These are:
Demographic segmentation: It is considered to be as the easiest way to segment market. This
type of market segmentation strategy assist business entity in reaching to the more number of
customers. In demographic market segmentation strategy , marketing manager bifurcate
customers in terms of several factors such as gender , age , income , occupation etc. This sort of
market segmentation strategies can be applied by the home base firm. As business entity is
operating in retail industry which covers wide market. Retail industry has specialized price set.
Behavioural segmentation::In this kind of market segmentation strategy, manager in an
organisation can bifurcate population on the foundation of behavioural activity of customer. In
addition to this utilization and decision making activity can be used as basis for market
segmentation.
Psycho graphic segmentation:This sort of marketing segmentation is dependent on the lifestyle,
social constituent, human action, interest, taste view or persuasion that help marketing manager
in confirming or ensuring an effectiveness of marketing segmentation strategy. Psycho graphic
segmentation have focus on mental aspects of consumer buying action.
This kind of marketing segmentation strategy is utilised by an organisation with the
purpose of providing high level of satisfaction to clients and delivering the product or services
that are demanded by customers (Ramanathan, Subramanian, Yu and Vijaygopal, 2017 ). It helps
an enterprise in recognising and meeting the expectation of customers.
Geographic segmentation-In this strategy, the bifurcation of the market is done on the basis of
income of people living in specific geographical region.
P5 Evaluating the B2B model and determining the way it helps to decision making
When a business makes a commercial transaction and relation with another business is
called business to business or B2B model. A business is sourcing materials for their production
process. A business must have need of services of another for operational reasons. A business re-
sell goods and services produced by others.
The modern age of marketing is depended on B2B marketing where convergence,
globalisation and the atomisation of the media calls for a new type of agency this requires us to
5

gain B2B expertise and sector-specialism with the scale and resources of a global media
network. The only situation when decision making process is highly complex, when working
with B2B market. And for B2B marketer, that means facing a very knowledgeable buyer. If a
business sells their product to businesses their branding has to start with a polished website. It is
an important promotional tools for Small, Medium Enterprises. All this makes B2B buyers
potentially more demanding than consumer markets (SchnÖring and Woisetschläger, 2017). In
the process of decision-making B2B play a lead role.
In the context of consumer decision journey the target market of B2B is more difficult
but for marketer's it functions in similar ways. If a company buy a product, they are structurally
loyal due to contractual agreements, but the emotional loyalty comes from the people, not the
account.
B2C is a process where company or organisation sells their products and provides their
services directly to the end consumers who are the end users and not sell again next. So B2C
stands for business to consumer. It is totally different things from B2B. The B2C as a business
model differs significantly from the B2B, which refers to commerce between two or more
business (Jasmand, Blazevic and de Ruyter, 2012). The term B2C become popular after 1990s
during dot-com boom, when it was used majorly for referring to online retailers, as well as
another companies who sold their products and provides services to the end consumers.
When B2C is use for decision making the one point is just come in front of us is one
person – the consumer. Many things for end consumers are commonly low cost 'want' items. And
about it the decision can be effectively and completely unplanned. People may be browsing a site
or may be ask from a friend to discuss about the product and after this process they go to the web
sites and buy the particular product. This means that more B2C purchases happen in such a short
time frame.
P6 Analysing the different techniques as well as methods which an organisation can apply to
increase customer relationship and customer loyalty
Management of customer relationship is a technique to manage the organisation's
potential and current customers. By maintain the customer relationship organisation can increase
their goodwill and their turnover as well. For maintaining the customer relationship entity use
different communication channels like company's website, email, telephone, live chat, after sale
6

services and marketing materials. Through customer relationship organisation learn about their
target audiences and know how to best cater to their needs.
Different techniques to increase customer relationship :-
1. Collect and maintain every customer's personal info. - the most important thing to
maintaining the CRM is to collect all the important information and track them about
their every customers. In other statement CRM is not about storing the sales history and
the contact details of any customer. It should also be used to save the personal
information so that company can provide best services every time when customer visit
the company's outlets.
2. Target based resource allocation – it is a fact that every company's most of sale (70-80%)
are comes from their 20-30% of their customer. So it is the best analytical tool for a
company to track the top creamy layer of customer. The CRM software will help for
finding these top creamy customers.
3. Response to customer complaints – it is also a different important aspect to managing the
customer relationship (lorez-Lopez and Ramon-Jeronimo, 2012). It will help to company
for knowing the needs of every customer and also their expectations about the particular
product.
4. Analyse the customer buying behaviour pattern – company should be also know about
the customer buying behaviour pattern so that they can increase their customer regularity.
Company can do this by mixture of CRM and with other data tracking tools and thereby
get a clear picture about customer's shopping history, shopping pattern, and also know
about customer's likes and dislikes.
5. Stay up to date – it is one of the essential part of improving the quality of database
management is increasing the rate oat which information is kept up-to-date. There are
many reasons for keeping CRM up to date.
CONCLUSION
It has been concluded from the project that delivering the high value proposition to
customer is very much important for an organisation in terms of achieving success. Study has
concluded that customer value management helps an enterprise in accomplishing the objectives.
7

It has also concluded that customer value management is considered to be as an effective tool
which can be used by an enterprise .As this will help business entity in delivering the high level
of satisfaction to workers and gaining their loyalty. Project has provided the description about
the several elements which are required for evaluating the customer lifetime value.
The study has suggested the several strategies which can be utilised by Homer base
company for segmenting the market. It has been recommended to marketing manager in Home
base company to include market segmentation strategy in marketing plan.
8

REFERENCES
Books and Journal
Baines, P. and et.al., 2017. Fundamentals of Marketing. Oxford University Press.
Milner, R. and Furnham, A., 2017. Measuring Customer Feedback, Response and Satisfaction.
Psychology. 8(03). pp.350.
Ramanathan, U. and et. al., 2017. Impact of customer loyalty and service operations on customer
behaviour and firm performance: empirical evidence from UK retail sector. Production
Planning & Control.28(6-8).pp.478-488.
Veselova, N. A., Tarasova, V. A. and Kossukhina, M. A., 2017, February. The application of
customer loyalty management methods to the management of innovative project. In
Young Researchers in Electrical and Electronic Engineering (EIConRus), 2017 IEEE
Conference of Russian (pp. 1371-1373). IEEE.
Worthington, S., 2017. Loyalty Programs and How They Can Benefit Retailers Through
Customer Knowledge. In The Customer is NOT Always Right? Marketing Orientations in
a Dynamic Business World (pp. 644-644). Springer. Cham.
Allaway, A.W., D’Souza, G., Berkowitz, D. and Northington, W.M., 2017. Trajectory-Based
Segmentation of Loyalty Program-Type Data. In The Customer is NOT Always Right?
Marketing Orientationsin a Dynamic Business World (pp. 532-532). Springer, Cham.
SchnÖring, M. and Woisetschläger, D.M., 2017. Determinants of Loyalty Card Usage
Frequency–a Multi-Level Analysis. In The Customer is NOT Always Right? Marketing
Orientationsin a Dynamic Business World (pp. 645-645). Springer. Cham.
Robra-Bissantz, S. and Lattemann, C., 2017. Customer-Oriented Strategies and Gamification—
The Example of Open Customer Innovation. In Gamification (pp. 51-63). Springer
International Publishing.
Jasmand, C., Blazevic, V. and de Ruyter, K., 2012. Generating sales while providing service: A
study of customer service representatives' ambidextrous behavior. Journal of Marketing.
76(1). pp.20-3
lorez-Lopez, R. and Ramon-Jeronimo, J. M., 2012. Managing logistics customer service under
uncertainty: An integrative fuzzy Kano framework. Information Sciences. 202. pp.41-57.
9

10