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Customer Value Management - Homebase

University: ICTM College London

  • Unit No: 4
  • Level: Diploma
  • Pages: 13 / Words 3203
  • Paper Type: Assignment
  • Course Code: BUS3001
  • Downloads: 659
Question :

According to the case of Homebase they have used SMS communication for uplifting their sales. As the new marketing manager you are assigned with the responsibility of lifting the fledging profit made by organisation. So the concept of CLV matrix for the sales staff to know about every customer relationship and their contribution to the bottom had to be determined with consideration of following factor:

  • Determine the concept of CLV, ways of calculating customer Lifetime value and factors that influence CLV at work place.
  • Evaluation of various segments in customer base and the opportunity for customer value creation
  • Determine various methods and techniques for maximising customer lifetime value.
Answer :
Organization Selected : Homebase


Customer value management is that techniques and method which has been evaluating and measuring the organisation customers views of perceived value for delivering effective money towards their competitors buyers. It is termed as that art which help in increasing customer value in individual manner. This will mainly designed and prepared for company which highlighting the major business operations and functions which directly affect on company profitability and productivity in effective manner.

This is the main feature and characteristics of particular concept which assist company for analysing and examining the customer value, concentrate on insufficient resources for making competitive benefits. Along with this, it is necessary for company is to determine the customer lifetime value which is required for an organisation so this will help administration for taking right and appropriate decision in proper manner (Hammer, 2015). The report is based on Homebase which is discussed in this project. The major element is to measure and evaluate customers lifetime value and also gain advantages which are described in this assignment.


P1 Various elements to ascertain customer's lifetime value

In the current business environment, customer relationship will play an essential role in enhancing the company income and revenue. Along with this, company will generating high amount of profitability at the time when buyers purchase large amount of items. The loyal customers are the major source which has value for the firm but this is scarce in quality. Then the maximum efforts can be done by the company for enhancing the customers value and formulate effective strategies and policies along with desired goals and targets of the firm. Homebase is the broadcasting company which serve and offer SMS facilities and services for getting potential goals and objectives in appropriate manner.

Also firm will performing different efforts by delivering effective and good services to their buyers and try to satisfying their all needs and wants in better way (Hollensen, 2015). This concept help in generating high amount of profitability. The approaches and concept of customer lifetime value is used by company to forecasting effective values and also maintain the strong relationship with their desired customers. Along with this, CLV should be described in terms of periodical value that can declared for predicting the 12 months relationship which determined the value will be £ x. with the help of this, company can retain their customers for long time period and as per this result, it will assist in analysing the income and productivity of firm. The main motive of the firm is to maintaining and managing strong relationship with their buyers that will assist in creating huge amount of profitability and revenue. There are various elements which can used by Homebase for measuring customer lifetime value that are as under:

  • Present value – It is that elements which addressing the customers point of view towards company goods and services (Kerzner and Kerzner, 2017). Along with this, it will indicates the discounted value which present cash flows that are acquired by firm consumers in proper manner. Therefore, this will captured the time value money which assist in retain the large number of buyers for lengthy period of framework. Along with this, the periodical value should be included in this.
  • Customer's loyalty – In addition to this, CLV mainly depend on customers loyalty. With the assistance of this, organisation can retain their buyers for long period of time. Loyalty of customers assist firm for surviving in the large market place of specific time. Therefore, this will increasing the CLV concepts. The customers loyalty provides competitive advantages to company and lack of reduction in the company income and profitability.
  • Mathematical formula – In this, specialist determine the customer relationship value (CRV) in terms of monetary price that will be considered with the assistance of mathematical techniques and methods in appropriate manner. The formula is included in this that is total financial gain of company separated by large number of time period when customers connected the organisation. It can indicated that average income of the company generated by buyers (Kim and et. al., 2015). Thus, company will perform different efforts for motivating their customers towards purchasing their innovative and creative products of the Homebase. Apart from this, this is one of the helpful and effectual elements which assist firm for analysing the customers relationship value that help them in retaining their employees as well as purchasers for lengthy instance frame.
  • Personalised CLV – The company measuring CLV on the basis of broad so this does not get much, at the time when company determine value on the basis of person and this can be point out as demonstration towards customer measure.
  • Cohort analysis – This is that analysis which indicate the large group of individuals who are sharing their similar features and characteristics in proper manner. Along with this, it can also indicate that there are different situations which directly affect on CLV for maintaining and developing strong relationship with their desired buyers.

All such major elements are assist company for making and creating huge image among large number of customers (Kotler, 2015). This will help in enhancing the profitability and productivity of company which make sure that it will survive in the market for long time period.

P2 Advantages of customer lifetime value to an organisation

CLV provides and deliver number of various advantages to the firm which help them in gaining attention of more customers towards their services and facilities. With the help of this, an organisation can create strong and effective customer base which can easily generating huge amount of income. Therefore, CLV concept also assist in making positive image at large market which help buyers for purchasing their different types of goods and services. Along with this, this will ensure that company survive in the market for taking long term advantages. There are various types of customer's lifetime value which are described as under:

  • Increasing reputation of company in market – Customer relationship value assist company in developing and building a positive image of an organisation at large market place. This will improving and maintaining the goodwill which help in attracting more customers in better manner. This is required for firm is to increasing the income and revenue and also provide an opportunities which help in serving to large number of customers in proper manner. In addition to this, it will increasing the market share which help in surviving for long time period.
  • Increasing profits and ensure maturation of organisation – In this, technology will play an essential role in the concept of customer relationship value. This is necessary for firm is to update their latest techniques and method which is used by firm for gaining customers attention in better manner (Kotler, 2017). Homebase company should use upgraded technologies which provide effective and innovative services to their buyers. Along with this, they are adopting the concept of online marketing which can be used by company for developing and maintaining new ideas. For company, it is required for expand their business operation in other location where they will gain high amount of income.
  • Financial growth – The major feature and characteristics of CLV is help the company for making and creating strong relationship with their buyers. It will ensure that customers loyalty help them in retaining for given period of frameworks. This is that factor which indicate the finances that are invested with in effective business transaction and production procedures (Kumar and Reinartz, 2016). Therefore, it will assist in improving and maintaining the manufacturing process which help them in satisfying their customers demand and requirements as per this result, they can analyse the appropriate financial growth of an enterprise.
  • Assist in retaining buyers – Customers is an asset which help in making and creating high amount of profit value. They are those individual who are buying such goods and services for satisfying all their wants and requirements. The concept of CLV concept assist company manager for recognizing the major characteristics which can be adopt for gaining attention of various number of customers. Along with this, this will assist the company for retaining the customers for long time period and deliver competitive benefits to the company.

Customer lifetime value is used by company for identify the upcoming opportunities for expanding and maintaining the strong relation with their buyers. Therefore, it is that concept which assist company for gathering and collecting relevant and correct data which are related to customer's. Such things are assist company managers for taking better decisions and this will increasing the income of an organisation.

P3 Factors impact the customer lifetime value

The concept of CLV is broad one which directly affect by large number of components and at some time this will also affect on company ability and capability in negative manner. The concept of CLV is consist with determining the customer life to offer different types of products and services at reasonable price (Pearson, 2016). Along with this, an individual ready to pay for company goods and services in better manner. Homebase using various tools and techniques which is known as customer value management for enhancing the organisation income and profits. There are different factors which directly affect on CLV then they will recognising such factors in negative manner by which components of CLV can be reduced. There are various factors which impact on customer value management that are described as under:

  • Need of professionals – in this factor, the company indicate lack of experts for carry out measurement and calculations which are related to maintaining customer relationship value. The non accessibility of professional outcome can be calculated in correct manner and this will affect on decision making procedures that negatively impact of company profitability (Rihova and et. al., 2015).
  • Lower participation in product categories – The wrong measurement of CLV results can reducing and eliminating the products quality according to the customers needs and demand in better manner. This will decrease the market share of company which help in becoming complex for firm to survive in the large market place. Therefore, lack of skilled employees will create problems for completing the business operations and its functions in appropriate manner.
  • Challenging to measure – Without the assistance of professional, it is very complex for company is to analyse and examine the amount of customer value management. Thus, there are different components which directly affect on decision making procedures in all optimistic and pessimistic manner. Therefore, straight computation of CLV is very complex due to this modification can changes will be take place within business surroundings.
  • Online and offline channels – There are large number of advanced techniques and methods of CLV which assist company in increasing skills and abilities of staff members for developing them capable to survive in the competitive market place (Schwepker and Schultz, 2015). Thus, it is essential for firm is to make development of different online and offline sources which can make effective decision making process for organisation that can lead towards optimising the usage of firm resources.
  • Size of enterprise – In this, large organisation enjoys strong and effective customer base but is very complex for measuring the CLV.


P4 Types of market segmentation which can be applied to customer base

Market segmentation is that process which divide the market and customers into large groups which are based on features, age, interest, level of standard, characteristics and some more. Along with this, this will assist company for selecting specific segmentation and also offer them effective products and services to satisfy them. It is not enhancing the number of firm income and profit at the time when firm will easily retain their customers for long period of time. In this, company manager analyse and identify an individual who pay firm goods and buying this for satisfying their needs and wants.

Along with this, this procedures are carry out by company manager for increasing their income and revenue (Stark, 2015). Segmentation should be chosen to maintain and manage growth of organisation in better manner. For the help of this, company can generating huge amount of profit in effectively. Generally, the process of segmenting market and offer them different types of products which help them in making high amount of income. There are three steps which are as follows:

  • Segmentation – It is the initial stage where company can easily identifying the customers behaviour as per their needs and wants. This will indicate that there are various services and facilities which are offer to fulfilling all requirements and needs of buyers and also they can try to retain their customers for long time period. For selecting specific segment, it is very essential for Homebase to determine the growth and success of potential segments.
  • Targeting – In this, company can choose one or more than one segment for offering to their services and facilities. It is necessary for company is to identifying the creative and attractive segmentation for creating large number of income or profits.
  • Positioning – Under this, the company will offer their effective goods and services to their buyers for satisfying their appropriate needs and demand of their customers which help in getting accurate position in the mind of people (Weinstein and Pohlman, 2015).

Procedures of segmentation base:

  • Demographic – It is that form of segmentation which are based on various factors that includes gender, age, caste, religion of people. This will assist company for gathering and collecting high amount of data about country population and their particular features. Along with this, this will play an essential role in manufacturing process. An organisation provide effective services and facilities to their customers according to their demand and needs and also they required to satisfy them. In addition to this, firm inform customers about their goods with the help of SMS services. This will assist firm for making and creating strong relationship with customer base.
  • Geographic – Under this segmentation procedures, it will taking place of different components that includes region, areas and state where customers can easily survive. Homebase offer and serve their effective services of SMS to college going students. The major advantages of this type of segmentation is that this will assist company for generating large amount of financial gain.
  • Psychographic – This segmentation is based on lifestyle hobby and involvement of a person which come under this (Xu, Peak and Prybutok, 2015). It will mainly consist with those market area were quality products and brands majorly compared with their prices. An organisation target such customers who are not progressive with price of effective products. An individual primarily centring on their deluxe living. It will consist with position, attribute, attitude of a person.
  • Behavioural – This is another type of segmentation in which customers reports and trends are analysing by company to examine their products loyalty and major other factors.
  • Mixed strategy – In this type of segmentation, all the major strategies and aspects are used by organisation for segmenting specific market.

P5 B2B and B2C decision making models

The process of decision making is treated as one of the essential procedure of each firm. The company manager role is to recognising and identifying all the components which direct affect on their desired operations. Along with this, business decision mainly depend on that type which help in performing effective functioning. In an organisation, B2B and B2C setting are type of business which help in taking decision in better manner. For increasing effectiveness and efficiency, it is required for Homebase manager is to do efforts which can easily developing decision making process. There are different model which are related with decision making and it is used in B2B and B2C. This can be analysed and understood by following table:

Decision making models



Rational or classical model of decision making:

It is the effective model which help in making decision in better manner. In this, decision has been taken which are related with business to consumer with the assistance of rational model. This will assist to define the clear issues and problems which occurs in the company. It is useful for small firm because it will indicate appropriate goals and targets in proper manner.

This will assist business in implementing all business operations and their functions. There are different elements of decision making process which are determined in this. Along with this, this model is useful for big organisation.

Administration or bounded rationality model

In this, decision making concept addressing the target goals which help in improving entire business performance. All the major options can be analyse by decision maker for taking effective decisions. B2B mainly consist with alternatives so this will assist in achieving with set goals and objectives in better manner. With the help of this, company can take better decision for making effective profitability and income of an organisation.

B2B is that tool and method which can be used by higher authorities for reaching with desired goals and targets in better manner. There are certain wide places which assist in taking accurate decisions. A company manager has large number of opinions which has been chosen the appropriate one.

Retrospective decision making model

In this, an organisation undertaken manufacturing value of products which attracting large number of customers.

Under this, staff members of company are inform about large scale of business concern. This will assist in maintaining and improving their performance which increasing the effectiveness of decision making procedures.

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