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.
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 th