Customer Value Management Report: Analysis of Customer Lifetime Value

This report delves into the realm of Customer Value Management (CVM), focusing on how businesses can understand and enhance customer relationships. The report begins by defining the core components that help enterprises assess and determine Customer Lifetime Value (CLV), followed by an exploration of the benefits of CLV, such as improved forecasting and effective segmentation. It then examines the factors that influence CLV, including professional expertise and market dynamics. The report also analyzes various market segmentation strategies and the decision-making models employed in both B2B and B2C contexts to create customer value. Furthermore, it discusses methods and techniques for increasing customer loyalty and fostering strong customer relationships. The report uses Homebase as a case study to illustrate these concepts, providing practical insights into how businesses can optimize their CVM strategies to drive profitability and customer retention.

Customer Value
Management

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Different components that help an enterprise to analyse and determine a customer's
lifetime value...............................................................................................................................1
P2 Benefits of customer lifetime value to a company.................................................................2
P3 Elements that affect the customer lifetime value...................................................................4
TASK 2............................................................................................................................................5
P4 Various types of market segmentation strategies...................................................................5
P5 B2B and B2C decision making models and opportunities for customers value creation......6
TASK 3 ...........................................................................................................................................7
P6 Different methods and techniques that can be apply by firm yo increase customer loyalty
and relationship...........................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Customer value management help organisations in ascertain what drives value for
consumers, help in measure the firm's performance as compare to the competition exist in
market, focus more on scare resources, combine efforts and support in create a competitive edge
for entity (Kotler, 2017). Mainly this concept is related with asking customers that what they
search when make a purchase decision, determine how customers rate the value offer by firm, as
compare to the value offer by its rivals. Analysis of customer's lifetime value support manager in
take better and reliable decision. Homebase firm is consider in present report for study. Different
components that support firm in ascertain customer's lifetime value and major benefits of CLV to
a business entity is all given in this. Further, factors that affect the customer lifetime value and
major strategies which can be use for market segmentation is also mentioned in this.
TASK 1
P1 Different components that help an enterprise to analyse and determine a customer's lifetime
value
Value is known as the perceived worth to the consumer of a specific service or good.
Today every enterprise wish to deliver customer value because this help in retain customers for a
long time period and at the same time help in attract more customers. In order to achieve this, it
is very important for every department of entity to play its role in deliver customer value
(Verhoef and Lemon, 2013). Create and maintain good relations with customers also play a
significant role in deliver customer's value. Homebase is a broadcasting enterprise that provide
SMS services to large number of customers. Numerous efforts are done by firm to provide better
services to its clients in order to attain their loyalty. With this, entity can capture a larger market
share and can increase its income. Entities use the concept of customer lifetime value in order to
maintain good relations with consumers and to ascertain value. Customer's lifetime value require
to be explain as periodic value that declared that the estimated 12 months relationship with
customers and its value will be £ x. This offer a opportunity to organisation to keep consumers
for a long time which ensure long term survival of firm in market (McColl-Kennedy and et. al.,
2012). Major aim of entities behind this is to retain customers for long time as this help in
generate large amount of profit. Main components that can be use by Homebase to determine
CLV are as follows:
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 Present value: This is one of the most significant element as this indicate the perception
of consumers towards services and products offer by business firm. A discounted value is
indicated in this, which present the cash flow get by the consumers. Time value of money
is also cover in this that support in keep consumers for long time. A periodic value is
include in this. Mathematical formula: Under this, experts view CLV as a monetary value and different
mathematical techniques and methods are use to ascertain the value. A formula is used in
this under which total revenue of organisation is divided by the number of months since
consumers join the firm (Flint and Woodruff, 2014). This help in determine the average
profit of entity generated by customers. Company do various efforts in order to influence
the behaviour of consumers to increase the sale of company's good. One of the main
benefit of this is that it increase the profits. This is very effective components as this
provide basis to analyse the customer relationship value and also indicate ways to better
satisfy the needs of consumers. Customer's loyalty: This is one of the factor that largely affect the success and growth of
entity. It help entity in generate large amount of profits and ensure its long term survival.
Customer loyalty directly increase CLV and provide competitive benefit to firm as well. Individualised CLV: Various basis are there to determine CLV and when firm analyse it
on a wide basis then it does not get much as compare to when entity examine the same on
individual basis.
 Cohort analysis: Cohort refers to group of individuals who share some same features. It
indicate different situations that impact on CLV and help in create good relations with
customer.
All these are the main element that support organisation to offer its products to million
customers. This increase profits and at the same time help in maintain a competitive position in
market.
P2 Benefits of customer lifetime value to a company
Undertake research to examine the customer lifetime is known as one of the most
important function of every organisation (Kumar and Reinartz, 2018). One of the main reason
behind this is that it help manager in develop effective strategies, provide direction to workers to
offer more value to the customers and also help in create good relations with them. For enhance
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customer loyalty and trust, firms manufacture and offer them quality services. One of the main
benefit of customer value is that it not only offer monetary benefit to company but boost the up
the process of firm's success (Jung Choo and et. al., 2012). Study of CLV make the manager
aware about how to satisfy the needs of customers in better way. Main benefits of analyse CLV
for an organisation is given below under the following points: Better forecasting: Study of customer lifetime value support manager in determine the
products that require to be manufacture for satisfy the demand of customers with help of
predict the future demand of target market (Beckers, Risselada and Verhoef, 2014). It
help in allocate funds and other resources as per the requirement which also help in
utilise them at an optimum level. In addition to this, this support in maintain the
employees and inventory require to carry out production process. All this enhance
efficiency of business firm. Effective segmentation: One of the main benefit of CLV is that it provide basis to
undertake segmentation in better manner. This support in offer products to customers as
per their requirement. This enhance their loyalty and trust toward the brand and at the
same time help in attract million customers. Retention of consumers: Customer vale management support in develop programs to
reduce attrition. It is very important for business firms to prioritize on which basis they
want to win back the customers and this guide in formulate better strategies. Re-invent loyalty management: One of the main benefit of customer lifetime value is
that it enhance operational efficiency and at the same time reduce customer
dissatisfaction. All this enhance manager's knowledge and make him aware about the
major factors that influence customers to make purchase decision. This support in
develop loyalty plans to enhance customer's loyalty.
 Enhance firm's goodwill in market: Study of CLV support organisation in create and
hold a good relationship with customers. This enhance goodwill of organisation which
help in attract more customers and directly increase the sale of company's product
(O'cass and Ngo, 2012). This increase market share and offer various long term benefits.
All these are the major benefits of study CLV. One of the main benefit of this is that it
make the manager about how to make a product more attractive. This support in take better
decision and also help in utilise all resources at an optimum level.
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P3 Elements that affect the customer lifetime value
As concept of CLV is a broad one so various elements are there which affect this and also
impact on success and profitability of company. Under this manager do efforts to ascertain the
life of company's product with customer and this also reveal how much individuals are ready to
pay for goods offer by entity (Beneke and et. al., 2013). Concept of CLV is used by Homebase
in order to offer more value to its customers and to keep them for long time. Different factors are
there that affect the CLV in negative way and in this situation, it become more important for
entity to handle those factors. Elements that affect the CLV can be understood by the points
given below: Lack of professionals: This aspect reveal lack of experts to collect carry out calculations
while examine customer lifetime's value. It is very essential that professional should be
there as this help in do right calculation as lack of professionals results in inaccurate
calculations. This impact on profits of entity in negative manner. Complex to calculate: Without experts or professional persons, it is complex for entity to
determine CLV. In addition to this, different factors are there that affect the whole
process in both positive and negative manner (Servaes and Tamayo, 2013). Accurate
calculation is very difficult due to large number of changes take place in business
environment. Low involvement in product categories: For offer better value to the customers, right
calculation of CLV is very necessary because wrong calculation impact CLV in negative
way. All this make it difficult for firm to survive in market. Lack of experts create
necessary delays in whole process. Online and offline channels: For carry out the process of determine CLV various tools
and techniques are there which can be utilise by entity. Due to introduction of different
online channels it become more easy for entity to carry out the process and this help in
get positive results.
 Size of firm: Size play a big role and largely affect the customer lifetime value. For
example: large firms enjoys a large and strong base of customers but at the same time it is
very difficult for large firm determine the CLV.
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TASK 2
P4 Various types of market segmentation strategies
Process of divide the whole market into groups of customers on basis of specific feature
such as age, income level, hobby, culture and on any other basis is known as segmentation.
Further this is the process of form homogeneous groups form heterogeneous market. This
function is perform by every organisation as this help in select a segment. After that entity
manufacture and offer them products as per their needs (Keyte and Locher, 2016). All this help
in create a large customer base and support in generate large amount of profits. Under this,
manager undertake research to identify ho much customers are ready to pay for company's
product. Segmentation is known as one of the most significant function of every enterprise as
this help in decide the most profitable segment which increase return on investment. Main steps
involve in the process of segmentation is given below under the following points: Segmentation: This is the first step in which enterprise determine and examine the
actions, behaviour and beliefs of customers. It provide an opportunity to better satisfy the
needs of target customers. For choose a right segment, it is very necessary for manager of
Homebase to analyse the growth potential of segment. Targeting: This is the next function perform by entity after carry out segmentation. In
this, firm select one or more segment to provide its services. Most attractive segment
support organisation in increase the number of it profits.
 Positioning: Under this, entity offer its products to its customers for fulfil their
requirements and to keep them for a long time period.
Process of segmentation is carry out by organisation on various bases and the major bases
can be understood by the following points: Demographic: Under this, entity undertake process of segmentation on basis of gender,
age, income level and beliefs (Fahy and Jobber, 2012). This help manager in gather data
related with the population and its specific features. All this provide basis to carry out
production process and help in manufactured goods as per the specific requirements of
customers. Homebase make its customers inform about its products with help of SMS. Geographic: In this, firm segment the market on basis of region, country, areas and state
in which customers live. This type of segmentation support entity in increase the number
of its profits.
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 Psychographic: This is another type of segmentation in which interest, hobby and
lifestyles of individuals is taken to carry out segmentation. One of the main features of
this type of segmentation is that in this brand and quality of product play a big role as
compare to its price (Martelo, Barroso and Cepeda, 2013). This type of segmentation is
useful for luxurious products. Entity do not target those individual who are not
conservative for the price of goods offer to them. Behavioural: Behaviour of customers remain the main base under this type of
segmentation. In this type of segmentation, trends and customers data reports are examine
by organisation to collect more information about their brand loyalty.
 Mixed strategy: Mix of all above strategies is use by entity for carry out segmentation.
P5 B2B and B2C decision making models and opportunities for customers value creation
Various type of decisions are take in an organisation for execute various operations so
entity can achieve its set goal and objective. It is very important that every decision should be
take place in right manner and necessary elements that affect the decision should be analyse by
the manager (Wang and Feng, 2012). Mainly business decision are affected by their nature and
type. When manager analyse the required factors then it increase the effectiveness of decision
making process and all this support entity in achieve desired outcome. Mainly business are of
two type known as B2B and B2C. Various decision making models are there that can be use by
firms to take better decision. These models are given in the following table:
Decision making models B2C B2B
Classical or rational decision
making model
This is one of the effective and
popular model of decision
making. In this, decisions
related with B2C are taken
with help of rational model.
One of the main benefit of this
model is that it help in clear
the problems and issues. This
model is beneficial for firms
whose aims and objectives are
Decision making model
supports enterprise in carry out
all business activities in
adequate manner. This type of
decision making model is
beneficial for large business
firms but complexity remain
exist in this.
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clear.
Bounded rationality or
administration model
This decision making model
indicate the major goals and
objectives whose attainment
improve overall performance
of business. All available
alternatives are analyse by the
decision maker in order to take
better decision. This increase
the effectiveness of decision
making process and help in
achieve desired goal.
This model is utilise by B2B to
attain its end goals. Various
aspects are examine in this that
help in take right decision.
Retrospective model of
decision making
In this, firm undertake
production of value goods to
better satisfy the needs of
customers and to attract more
individuals.
In this performance of
employees is monitor. (Kelly,
Male and Graham,2014) Staff
members are informed about
their actions so they can
perform well and at the same
time entity cam achieve its set
goal or objective.
TASK 3
P6 Different methods and techniques that can be apply by firm yo increase customer loyalty and
relationship
Offer quality and featured services to its customers is known as one of the most essential
function of every enterprise as this help in attain its set goals and objectives in adequate manner.
Various services are offer by HomeBase to its target customers in order to satisfy their needs and
to keep them for a long time period. This help in attract large number of individuals towards
firm's product and also provide competitive benefit to it. Create and maintain good relations with
customers enhance their loyalty. Various efforts are done by entity in order to interact with its
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consumers. Effective tools that can be utilise by organisation in order to enhance loyalty of target
customers are given below under the following points: E-mails: This is one of the significant tool that support HomeBase in create and maintain
good relations with its target customers. In this, entity transfer message to its consumers
with help of e-mail. This is known as one of the effective tool to interact with consumers
as this ensure delivery of message at fast speed (Kelly, male and Graham, 2014). Further,
customers also have the opportunity to send emails to share their opinions and experience
about company's product. When customer get a reply on his/her mail then it enhance
satisfaction of customers and enhance their loyalty. SMS: In this, entity send text message to its customers, this is very effective and simple
as this does not require internet facility. With this, firm can interact with its customers
and can achieve its set goals and objectives. Telephone: Under this, a conversation take place between two parties. Main feature of
this is that, it is very cost effective and time saving as well. Consumers can interact with
managers to get solution of their problems at quick.
 Internet: Due to facility of internet, large number of individuals use various social
networking sites such as Twitter, Facebook and many more. These social platforms
provide an opportunity to manager to interact with its target customers to make them
inform about its products and services. All this increase customer base and profits of
organisation.
All these are the most popular tools which can be effectively use by Homebase to
influence customers to buy its products and services.
CONCLUSION
From the given project report, it can be summarised that it is very important for a
business organisation to offer quality and value product to its products. When entity manufacture
an offer value to its target customers then it not only help in satisfy their needs but at the same
time provide competitive benefit to organisation. For retain customers for a long time period, it is
very important for organisation to manufacture products as per their needs. It is very important
for entity to carry out segmentation in effective manner as this largely affect the growth of entity.
Large number of methods and tools are there which can be use by firm to create good
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relationship with customers and to enhance their loyalty. It is very essential for Homebase to use
right tool.
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