Customer Value Management Report: Enhancing Customer Value at Homebase

This report provides a comprehensive analysis of customer value management (CVM), focusing on its application to Homebase, a British home development retailer. The report begins by defining CVM and its importance, then delves into the various components used to determine customer lifetime v...Read More

Customer Value Management

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Various components to determine customer's lifetime value...............................................1
P2. Benefits of customer lifetime value to an enterprise............................................................3
P3. Factors influencing the customer lifetime value...................................................................4
TASK 2............................................................................................................................................6
P4 Type of market segmentation that can be applied to a customer base...................................6
P5 B2B and B2C decision making models and creation of consumer value opportunities........8
TASK 3..........................................................................................................................................10
P6 Different techniques and methods through which consumer loyalty and relationship
increase......................................................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13

INTRODUCTION
Customer value management can be defined as a tool which is optimised for measuring
the perception and view of consumer in context of perceived value for the capital delivered to the
competitor's client. It can be considered as an art of gaining value of consumer individually.
Majorly, it is planned through organisation to address the major practices which influence the
organisation's profitability. One of the major feature of this aspect is that this can aid in reviving
the consumer value, aiming on scarce resource to achieve a competitive edge. Setting lifetime
value of consumer, this is fundamental for an organisation as it can aid in administration in
undertaking appropriate decision. This report will study the Homebase, an organisation which is
British home development retailer as well as a garden centre across entire UL and Republic of
Ireland (Adam, 2013). Major components is to measure the consumer's lifetime value along with
its various benefits which is outlined under this assignment. Further, major factors that impact
consumer lifetime value is also written under this report. In regard of this, several sort of market
segmentation and models of decision making is reviewed along with techniques of consumer
loyalty and relationship.
TASK 1
P1. Various components to determine customer's lifetime value
In the present business environment, consumer relationship play vital role in the
increment of firm's profit. An organisation generates high benefits amount when consumer make
more decision of purchase or buy services in bulk. Loyal consumer can be considered as the
value source for a firm but are scarce. So, maximum practices should be coordinate through the
enterprise to emphasise the value of enterprise among consumer along with evolving better
company strategies to allocate same objectives and goals of organisation.
Homebase is a British home development supermarket and stores of garden centre in
United Kingdom and Ireland. Various components to determine customer's lifetime value, the
company has optimise SMS service technique to their target market (Bosworth, 2012).
Organisation operates and perform several practices to deliver more effective and suitable
service to their potential consumer and service user to generate high profit amount and carry out
products as per their demand. Customer lifetime value concept is optimised through the
organisation in regard of managing and valuing better consumer relations. In regard to it, CLV
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can be referred as a periodic value that affirms that 12 month relationship estimation along with
its value i.e. £ x. With it, organisation can retain their consumer for more longer period as well as
can result in emphasising the productivity and benefits of organisation. Major organisation aim is
behind opting this is to maintain and create more effective consumer relationship that assist
enterprise in generating higher benefits amount in comparison of competitors (Castells, 2011).
Here are mentioned the major elements opted through Homebase to measure CLV: Present Value: It is the components that highlight the consumer perception in relation to
services and organisational product. This signifies a deduction value that presents flow of
cash get through the organisation of consumer. Further, this covers more money and time
value that can assists in retaining clients for a longer period of time. A periodic value is
involving in this. Mathematical Formula: As per this, the consumer relationship value is considered as the
monetary cost i.e. set with the optimisation of mathematical techniques and tool. A
formula is used for the CLV that refer to the total firm revenues eliminated through
period when the customer's joined the company. This signifies several encouragement
practices of organisation generated through consumer. Further organisation perform
several encourage and confidence boosting procedure for increasing the organisation's
benefits. It is effective and useful elements as it can aid enterprise in evaluating CLV that
support the enterprise in retaining service user for longer time period. Consumer's Loyalty: CLV hugely rely on the consumer's loyalty. With the assistance of
this element, organisation can retain their consumer for more longer period of time.
Customer loyalty carries out sustainability of firm in marketplace for longer time period.
Further, this enhance the consumer lifetime value (Hawkins, 2013). This deliver a
competitive edge to enterprise and decrease the company's benefits amount. Individualised CLV: The organisation calculate customer lifetime value on a wide
concept. If this method isn't enough successful, this set the individual value then this
signify the presentation in regard of consumer value.
 Cohort Evaluation: This indicate an individual group who share some traits. It presents
several condition which influence customer lifetime value to build and manage more
better consumer relations.
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Above mentioned activities are the main elements which aid organisation in creating
large and more strong consumer base for organisation. This also increase the company's benefits
and at the same time make certain the survival of organisation.
P2. Benefits of customer lifetime value to an enterprise
As customer lifetime value deliver huge benefits amount to an organisation, it can be
considered the major cause of attention delivery of large number of consumer. With it,
organisation can create a large and strong consumer base by which firm can generate large profit
amount (Hennessy and McCleary, 2011). Further, CLV concept aid the organisation in creating
more positive market environment that help in attracting consumer number toward the offering
of company. It will also ensure he organisation's survival in trade and deliver several long term
advantages to enterprise. Some of the benefits for accommodating CLV procedure are mentioned
under:
 Improve goodwill of organisation in market: consumer value and relationship concept
assist in maintaining and building a positive portrayal of organisation in marketplace.
This can enhance the goodwill of enterprise and attract large customer number. These
practices help in increasing the enterprise benefits and deliver Homebase an opportunity
to serve more consumer number. This emphasise the share of market in company and
make certain a longer survival period of organisation. Increase the benefits and ascertain company's growth: technology has vital tole in the
consumer relationship value management. This is very fundamental which help in
creasing and updating new technologies which should be opted through organisation to
provide their consumer. Homebase embarked should utilise more effective technologies
in regard of managing effective services and offer better services to their consumer.
Online marketing concept is opted through enterprise that encourage innovative ideas
among service user (Hollensen, 2015). Further, this make certain effective business
operations expansion that increase the enterprise's benefits. Financial growth: major customer lifetime value feature is that this can assist
organisation to maintain and create a healthy consumer relationship. This ascertain the
dedication and loyalty of customer which can aid the organisation to retain them for a
longer time period. These elements indicates whether suitable funds are invested in the
manufacturing procedure and business operations. Further, it can aid in development of
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production procedure which can provide in satiate demands of consumer and it can result
in financial organisational growth.
 Assist in Retaining Consumer: Consumer are also considered as the major benefit maker
of an organisation. These are the major entity which make the purchase decision to
accomplish their basic requirements. Customer lifetime value management concept aid
the manager in understanding the major feature that should be there in service to attract
huge consumer amount as well as satisfying their demand (Kerzner and Kerzner, 2017).
It can aid enterprise in consumer retention for longer time period and deliver competitive
edge to organisation.
Hence, it can affirm that customer lifetime value managed can be optimised to identify
organisation's future expansion opportunities and healthy relationship management with their
consumer. Further, the concept can aid the organisation in gathering huge relevant information
associated with their service user. Whole procedure aid the company's manager in undertaking
the major decision and emphasising the organisational benefits.
P3. Factors influencing the customer lifetime value
Customer lifetime value is a wide concept that is affected by large components and
sometime, it can influence an organisation's profitability in more negative manner. Major CLV
concept include the determination of life of consumer with the organisation offering and
recognising the cost that a person is prepared to pay for product of firm. Homebase opt the
consumer value management technique to emphasise the company's benefits and number of
consumer. There are numerous factors which are existing that can influence the customer
lifetime value after identification and reviewing those element's negative influence those
components which can be minimised (Kim and et. al., 2015). Factors which influence upon
consumer value administration which are discussed as below: Dearth of Professionals: In prospect presents the expertise lack in order to carry out the
calculations associated with the value of consumer relationship. Non professional
availability can result in inappropriate calculations as well as also affect the process of
decision making that can negatively influence the company's profit. Low engagement in categories of product: Wrong measurement of customer lifetime
value can adversely impact on the services and product quality in contrast of consumer
standard. This ca reduce the share of market from organisation and this can lead company
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toward more complex survival in trade. Further, dearth of qualified working staff create
more barrier in entire operations of business in more efficient and effective manner. Complex to calculate: It is complex to calculate the consumer lifetime value for
Homebase in absence of a professional in this sector. Further, numerous components are
there that influence the process of decision making of organisation in both negative and
positive manner (Kotler, 2015). Further, proper CLV calculation is really complicated
cause of the alternation which take place in the business environment. Offline and Online Channels: Numerous CLV techniques in the recent era are able to
assist an organisation in skill enhancement among worker to make certain whether firm
can survive among the competitive environment of business. Various offline and online
development are undertaken for process of decision making by the organisation that can
carry out optimum utilisation of organisational resources.
 Organisation Size: Large organisation is entertained from large and strong consumer
base but this is become very complex for the CLV calculation. Homebase is an emerging
organisation which has good positioning and existence in the competitive marketplace.
There are more than 17000 worker of company and approximate 283 stores of enterprise
in only United Kingdom.
Through evaluating these presented factors, Homebase can easily identify and measure
the calculation of their customer value management which aid in achieving the expected
outcome in more efficient manner. It is essential for the organisations to manage their growth
and consider these elements in order to achieve the outcome. As per the case study, more people
like and get attracted toward the online and new media that has assisted the organisation in
gaining new consumer base to Homebase (Kotler, 2017). Though the use of SMS and email
marketing campaign, both has different influence on the practices of organisation.
Through the assistance and utilisation of effective methods and strategies, Homebase can
meet their effective outcome emphasising over the customer lifetime value. Through the better
communication, programs of loyalty, up-selling and cross-selling, authentic online presence and
enhancing the consumer service level of organisation, one can achieve the effective
organisational outcome in more significant manner.
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TASK 2
P4 Type of market segmentation that can be applied to a customer base
Segmentation of market can be defined as the procedure which is optimise to eliminate
the market along with segmenting consumer on the grounds of their traits, age, income level and
other factors. This can assists the organisation in choosing a proper segment to focus over the
practices to satiate their demands. This procedure not only assist organisation in gaining benefits
but at the same time assist organisation in retaining consumer for more period of time (Kumar
and Reinartz, 2016). Further, manager is accountable for reviewing and identifying the person
who pay for services and products of organisation as well as make purchase for accomplish their
demands.
The procedure carries out the practices for emphasising the benefits of organisation.
Manager only use the segments which have high growth potential. Organisation which execute
marketing strategies seek that distinct consumer have different demands and requirements. In
order to resolve the issues associated with the market segments and focus over the strategies of
business and marketing, an organisation shapes their segments of market and seek suitable straits
that allows the organisation to aim the suitable targets of services and products tailored to certain
requirements. Through the assistance of this, organisation can generate huge amount of benefits.
In the gradual term, the procedure of market segmentation consist of major three steps which are
described beneath:
Segmentation: It is the initial phase in which an organisation examine and identify the
requirement and behaviour of consumer (Schwepker and Schultz, 2015). This designate
Homebase's service offered through this for effective requirements and satiate it for longer time
period of time. Before selecting the segment of enterprise, this is fundamental for Homebase to
set the potential growth and performance of entire segment.
Targetting: enterprise select more than one division or segment of market to offer their
products. Organisation distinguish the most effective and attractive segment to formulate more
profit numbers.
Positioning: As per this, determination of perception of consumer in context of services
and products provided to consumer by Homebase.
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There are several types of elimination of market which is being made in regard of
achieving business objectives and aiming over the certain target of market. Here are mention the
segmentation process which is mentioned here:
Demographic: in the sort of market segmentation, there are several components such as
gender, consumer norms, age and many other components. This can assist the organisation in
gathering huge information amount in context of certain characteristics and population. This play
a vital role in the process of production. Organisation offer several services to their consumer as
per demands, requirements and need of consumer for satiate them. Organisation aware consumer
their services with SMS assistance (Stark, 2015). This can aid organisation in creating a powerful
consumer base.
Geographic: As per segmentation procedure to make certain components like
government, region and places where consumer live. Homebase provide different SMS offer to
ongoing college student. One of the major benefit of such segment type is that this can aid
organisation in generating more benefits amount.
Psychographic: In this type, the segments is done on the grounds of interest and hobby of
people. It consist of those place of market in which brand and product quality is more
fundamental relative to their cost. Organisation focus over those consumer who are not
concerned with the cost of services. Individual who are more oriented toward luxurious life are
the major focus of this segment. It involve status, personality and attribute of individual.
Behavioural: It is another sort of segmentation procedure, in which reports of consumer
data and trends are evaluated through enterprise to review their loyalty of brand and other
components.
Mixed Strategy: In this segmentation type, entire above mentioned factors and strategies
are optimised through the organisation for distinguishing the market in certain segments.
Hence, through the management and determination of suitable practices of market
segmentation, this is essential for an organisation to achieve their business objectives through the
assistance of marketing segmentation, positioning and targetting procedure. This not only help in
understanding the focus group of enterprise but also help in analysing skills, knowledge and
assets of enterprise evaluating the value creation opportunities of organisation. This is concerned
with the capabilities and resource appraisal activities of organisation in which context the
opportunities of value creation and other extrinsic practices is being developed. There are several
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advantages which can be aid in identifying the unique opportunities for optimum utilisation of
resource in new and recent marketplace.
P5 B2B and B2C decision making models and creation of consumer value opportunities
Decision making procedure can be defined as one of the fundamental procedure of each
organisation. The manager of Homebase is accountable to identify and evaluate entire
components that influence this procedure. Decision of business are hugely rely on the kind in
which the organisation are performing their operations. B2C and B2B business are termed as the
types of business which undertake the following decision discussed as below:
Decision making techniques
and models
B2C B2B
Classical and rational model
of decision making:
It can be considered as one of
effective decision making
model in business. As per the
decision undertaken in B2C,
the business practices are
associated with the consumer
business activities by the help
of rational model. This assist
in determining and resolving
issues. It is advantage for
small and start-up companies
that designate clear
organisational objectives.
It can aid the business
enterprise in implementing the
activities in more significant
manner. Several components
are model of decision making
are not able to undertake in
this. This is effective and
beneficial for large firms of
business organisation.
management or bounded
model of rationality
As per this, model of decision
making is highlighted in the
achievement of final objectives
and goals that develop entire
performance of business.
Whole business alternatives
are reviewed through the
In this, higher authorities of
organisation optimise
technique in order to achieve
the determined objectives and
target. Broad range of services
can help in covering the
outcome in more efficient
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decision maker to execute
more effective judgements.
B2C include the variables in
attaining the determined
objectives and goals of
enterprise. Through the
assistance of this, an
organisation can undertake
better decisions and emphasise
the quality of company.
manner. Among the numerous
alternative number, this assist
in chose one.
Retrospective decision making
model
In this, organisation should
undertaken the value of
production good, company can
attract their consumer.
In this, employee of enterprise
are aware in regard of business
scale of organisation. It can
assist in the performance
improvement through
enhancing the decision making
effectiveness.
Often, the value creation opportunities rely in several components such as stimulation and
perception of customer, consumer imagery as well as many other procedure that is needed to
mention.
The consumer perception can be defined as the action and practices in relation to
products and services of organisation that can assist them in achieving objectives of business.
These depend on numerous elements like requirements, value, wants and other experience of
individual (Xu, Peak and Prybutok, 2015). A stimulus can be defined as any input portion to any
sense such as product, advertisement, commercials, packages etc. Homebase is coping up with
several controversies that is leading to the decrease in sales amount leading to the fall of
company. For managing better recognition, the enterprise has maintained an campaign for SMS
in which organisation have achieved more than 20% of their sales by the assistance of SMS
activities and 26.5% form mail and SMS that was later announced as the one effective techniques
of organisation. Homebase can maintain their products and stores by rebuilding recognition of
organisation through opting the retrieving and retaining information techniques which can help
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in utilising better development opportunities. The main aim of the creation of value is to sell,
create value and trade of the brand and service to consumer as well as capturing the values and
benefits.
Hence, the campaign and program were a successful activity that is delivering effective
recognition of brand to Homebase assisting organisation in the process of recalling and
maintaining brand equity. By this, B2C and B2B can be managed and undertaken in more
significant way.
TASK 3
P6 Different techniques and methods through which consumer loyalty and relationship increase
It is fundamental for a company like Homebase to manage more appropriate relationship
with their consumer by which one can achieve their determined outcome along with creating a
more unique brand value among services user. Homebase is opting the media techniques and
campaign for the sales increment and development of their services and products that is essential
for the organisation. Though, there are several strategies and techniques by which an
organisation can meet effective relationship with their consumer that are mentioned under:
Response and Appreciation of Clients: It is one of effective and suitable technique that
allow consumer to achieve their expected requirements and demands as per which one can
accomplish responsive feature to the delivered consumer facilities (Xu, Peak and Prybutok,
2015). By this, consumer can deliver their ideas and appreciate the favoured services and
products.
Email-Marketing: It is one of the most appropriate and effective technique which create
reputation and professional by delivering more free insights. It proclaims the long and short term
impact and cost effective method assist in connecting with their clients by updating less
information or new design to them.
Rewarding Customer: By coordinating the rewarding method for customer and
supporting consumer potentiality with offering consumer different exotic plans, a company can
achieve their determined target and create more effective connection between organisation and
their client. Homebase use this approach for managing their consumer as this is less time intense,
stimulating and effective method that can emphasise the outcome.
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Hoembase can opt these strategies for creating long term connection with their consumer
that can direct the effective productivity of incurred operations of business. This can help in
carrying out more strong brand value and creating a unique recognition through opting digital
media which can also emphasise the productivity of Homebase activities as this is more utilised
and used media techniques in present era. By social media, media forums and app of Homebase,
organisation can extent their reach of enterprise. This is interactive and more fast medium which
create both communication side and effective clients and firm relationship.
Brand loyalty can be referred as the pattern of consumer behaviour where consumer become
more committed to brand and make the decision of purchase to certain brand only. Such clients
only create the purchase decisions regardless cost etc. The referred enterprise has revamped their
channel of digital media to create high individualisation in relation to their consumer which can
ad in creating brand loyalty along with driving more sales online (Xu, Peak and Prybutok,
2015). There are several methods that the organisation is opting incremental innovation, visual
engagement and immersive content. Here are mentioned some of the opted techniques discussed
here: Up-selling: It is the activity of encouragement that is used as more higher end of product.
This method mainly opted for the consumer satisfaction increment from the activities of
customer. It can aid clients in visualisation of clients which client get by making buying
decision of paid services.
 Cross-selling: This method is designated to satiate complementary, other demand by the
general unfulfilled items. It is prevalent that include insurance banks, agencies and
commerce types. This method is opted in the life-cycle campaign, while the product
checkout process.
Homebase can gain more satisfaction in regard of their product and achieve their
consumer value through the help of above mentioned up-selling and cross-selling methods.
CONCLUSION
This can be summarised from the stated report that customer value management cancan
be considered as an art of gaining value of consumer individually. One of the major feature of
this aspect is that this can aid in reviving the consumer value, aiming on scarce resource to
achieve a competitive edge. Setting lifetime value of consumer, this is fundamental for an
organisation as it can aid in administration in undertaking appropriate decision. Various
11

components to determine customer's lifetime value, the company has optimise SMS service
technique to their target market. Customer lifetime value concept is optimised through the
organisation in regard of managing and valuing better consumer relations. There are numerous
factors which are existing that can influence the customer lifetime value after identification and
reviewing those element's negative influence those components which can be minimised.
Through the better communication, programs of loyalty, up-selling and cross-selling, authentic
online presence and enhancing the consumer service level of organisation, one can achieve the
effective organisational outcome in more significant manner. this is essential for an organisation
to achieve their business objectives through the assistance of marketing segmentation,
positioning and targetting procedure.
12

REFERENCES
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Kim, J. and et. al., 2015. The contributions of firm innovativeness to customer value in
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Kotler, P., 2015. Framework for marketing management. Pearson Education India.
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Kumar, V. and Reinartz, W., 2016. Creating enduring customer value. Journal of Marketing.
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Schwepker, C. H. and Schultz, R. J., 2015. Influence of the ethical servant leader and ethical
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Stark, J., 2015. Product lifecycle management. In Product Lifecycle Management (Volume 1).
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Xu, C., Peak, D. and Prybutok, V., 2015. A customer value, satisfaction, and loyalty perspective
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Online
4 Strategies That Drive Brand Loyalty. 2016. [Online]. Available
through:<https://www.entrepreneur.com/article/286767>.
The 5 Benefits of Customer Lifetime Value. 2016. [Online]. Available
through:<https://synthesis.co.nz/5-benefits-customer-lifetime-value/>.
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