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Unit 3 Customer Value Management Level 4 City College


Customer lifetime value can can be discussed as the relationship with the customer which gives the net profit to the company. This relationship is defined in the monetary terms in which customer is valued where the cash flow from the customer is calculated (Nenonen and Storbacka, 2016). It is an important concept of marketing mix model and shows the way to capture new customers. Customer value management can be defines as the comparison of cash flows perceived from the customers in relation to the customers of the rivalries. It is an important way of making relation with the mechanism of purchasing powers which has direct impact on profit and loss, ROI, and market share of the company.

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P1 Different factors which analyse customer lifetime value

Customer can achieve its value by the delivering of the most valuable products and services. It is one the important marketing tool. The expected value created by customers in retail sector in the organisations make the customers understand its value and make them decide to take actions on the experience and use of products. Currently, retail sector working from home have achieved customer's satisfaction by giving them innovative products and services. This satisfaction can be decided as the performance detected which is resulted from the person's emotions and feelings by using the product as compared to the products of the competitive bodies (Abe, 2015). In market based planning, customer's orientation is also very crucial and plays an important in which the leader have the responsibility to sustain the the customers by providing great level of satisfaction and by implementing good marketing skills. And through these innovative ideas it is already decided that customer will definitely perceive good quality products. The calculation cost provided the value of the home based products which are related with their stages of emotions and decisions like corporate brand, functional image, personnel etc.

To understand customers, Customer lifetime values are used as metric and most common factor in marketing research. CLV can be calculated through

Average revenue per user: In this the average revenue is calculated depending upon per customer's per month and then multiplied to get two year or one CLV.

Cohort Analysis: A bunch of customers that share a portion of characteristics. Companies can get clear vision of relationships with customers by examining cohorts.

Individualized CLV: In this companies mainly focus on the calculation of total value of customers by running any campaign, channel or source.

 Advantages Of CLV:

Helps in saving funds: This the the most cost effective and cheapest method which is used in Home base for the retention of customers instead of searching the new customers. Here customer's satisfaction are treated on higher level and they understand this as well. That's why the main focus is fulfilling customer's exceptions (King, Dhameeth and Kim, 2017). This on other saves time and momey of the company which they spend on building new customer base line The new customers no doubt are difficult to understand and consumes more time of the managers to know the complete preview of the products and services of the company.

High level of marketing: It heads towards concrete marketing of the customers of Home base by calculating the benefits produced by the products sold of their customers.

Increment in Branding: There is regular contact with customers which leads to popularity in brands of the products.

 Related to their purchasing power and meeting the expectations the companies have to generate trust over the expectations of the customers. And for this security system workplace has been develop by Home base. Instead of finding new customers which proves good for the company , Home base tries to retain their old customers by using their own Marketing metrics, which is an old age calculation (Zhang, Liang and Wang, 2016) . Rather than this, organisation can calculate by simply deducting the cost revenue from the amount which is produced by the customers. And for actual value the leaders need to identify the real value when it was created. At each and every point of marketing , profits should be measured accurately and then summed up all together.

P2 Main Benefits of customer lifetime value of the organisation

For the success of business and functional operations, customer lifetime value creation process is used by the marketers. In current situation, where the the technology has reached pinnacle and every private organisation wants to be ahead, there is always a nice approach in the market to reach the unexploited customers (Clempner and Poznyak, 2014). Currently Home base has supported various strategies by creating potential value of customers and providing a chance to develop customer relationship to their employees which effects their profit and sales. Customer's engagement in the products and widening of the relationship between employees and customers has effected Home base CLV a lot. Various benefits of CLV can be described on this basis:

Perfect Segmentation of customers: For the correct customer's identification, and segmentation Customized services and leading profiles are very necessary elements. These things depends on the dynamic and rational pricing chart which is received from the high profits over the customers (Anker, Sparks and Grönroos, 2015). Then targeting the loyal customer of Home-base with an effective and potential values and accurate forecasting generating the leading conversation ratios by segmentation is an important part of customer lifetime value. It helps in the determination of the investment and indicates the valuable management operations.

Decent forecasting: By predicting the upcoming services and demands of the customers, the manager of Home base decides the availability of the products and services which helps the company in deciding the optimum level of workers, assets and inventory. It trims the loss of productivity by guiding the good use of better resource allocation strategies (Gong, Choi and Murdy, 2016). Customer's behaviour and its availability is very important

Developing Loyal Customer base: values of customers are considered at much higher level which indicates the betterment in operational efficiency of Homebase and by this customer dissatisfaction is also detected.

Retaining customer: Customer lifetime creation also provides initiative to design new programs which results in the cost reduction of customer products. Home base also emphasizes on the priorities of the customers and helps in developing strategies for the development and growth.

Thus, in can be finalised that Customer lifetime value creation ia an important aspect in designing the business model and helps in implementing strategies for the upliftment of the business and increase in customer support. Through various assumptions and metrics customers life time value can be calculated which can provide the advantage and add the involvement of customers in Home base. Forecasting the demands and supplies of services and products increases the customer value orientation and proper allocation of resources leads the profit value.

P3 Influence of customer lifetime value

There are various responsibilities of Home base marketers and they face many challenges  in this competitive world. To increase the customer lifetime value and their excitement towards their stores they do their their best and apply various strategies.  Various factors are there which are responsible for maintaining loyal customer base line and achieving greater sales and reputation in the market (Lilien, 2016). Business to customer is a crucial part of this type of dealing in the market which is directly deals to the consumers. The transaction is between the organisation and the consumers who are the end users and are counterpart of their products and services. CLV in Home base mainly forces on meeting the expectation of customers in business to customer type of transactions. CLV clearly shows that Home base needs to focus the wants of the customers. Transaction one in B2b in many countries refers to commercial type of business. We can take the example of Home base which initiated its business through retailing and did reselling of the products and services to others. CLV was also provided in this organisation as the company already new the customer won't opt for any other brand.

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