k n praveen-customer lifetime value

8/7/2019 K N Praveen-Customer Lifetime Value

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Presented By K. N. PraveenPG Marketing

Roll No 27

Under the guidance of

Prof. Kiran Sharma



T erm for methodologies, technologies ande-commerce capabilities to managecustomer relationshipsCRM·s origin based on the paradigm tosatisfy customers with best possiblealternative in the market through arelational exchange processCRM is about providing customers withproducts and services before he candemand them



Role of customers essential in corporateprofitabilityCost of retaining clients much lower than

acquiring new onesMany services by nature require ongoingrelationships (Insurance, Banking etc.)Many customers prefer forming relations

with individuals and organizations thanproducts4 key areas of business for relationshipmanagement-strategy, people, technologyand process



D efining expected customer life cyclecrucial for companiesImplementing integration of systems,

processes, service providers, businesstechnology and infrastructure in addition tocreation of measurement system to monitorthe progress augments the customer valuemodelCLV: relevant costs of customer acquisition,retention, and corresponding revenuesgenerated from each customer segment



CLV creation consists of Ad hoc segmentation and data analysis for data basemarketing

Automation of decisions against customer requestsT argeted retention activities and decisions to ensureretention effort aligned to customer lifetime valueIdentification of customer categories for crossselling and up selling of products and servicesD evelopment of service and product portfoliosaligned to concept of CLV

Alignment of customers to appropriate channels byCLV



DH L Customer First programCreated by OgilvyOne

Customer loyalty program targeted atcustomer at different times stages in theirlifecyclesT hese customers then were sent targetedmails, phone calls etc depending on

which stage of their lifecycle they are in



Looks at customer·s value to the firmbased on predicted future costs and

transactionsD efined as sum of cumulated future cashflows using WACC of a customer over hisor her lifetime with companyFor most cases, it is calculated for next 3years



Proactively manages individual customerrelationships to maximize overallprofitability

Level of customer contacts customizedacross customers and is focus of differentialresource allocation for managing customerprofitabilityContact through various channels-salespersons, direct mail, telesales, e-mail,and catalogs.CLV used for prioritizing marketingresources among customers



Process PurposeMeasure customer lifetime value(CLV)

To obtain a measure of the potentialvalue of IBM customers.

Identify the drivers of CLVSo that managers can influence theCLV

Determine optimal level of contactsfor each customer that wouldmaximize their respective CLV

To guide managers on the level of investment required for eachcustomer

Develop propensity models to predictwhat product(s) a customer is likely topurchase

To develop a product message whencontacting a customer

Reallocate marketing contacts from

low CLV customers to high CLVcustomers To maximize marketing productivity



Purchase History Marketing Information Gross Margin Data

Computation of customerselection metrics

Estimation timeperiod

Compare customer selection

metrics in choosing thevaluable customer"who to target"

Identifying the optimal contactstrategy for customer selectionstrategy using CLV

Developing contact strategy

"How many times to contact" Propensity Modelling"What products to pitch" Field Study

Experimentationtime period

Contactgroup

No contactgroup

Compare performance



Stage 1: Model D evelopmentCLV and qualitative inputs from sales team tobase their marketing decisions for samplecustomers

Stage 2: Implementationx

Customers split into 2 groups and marketing contactsreallocated to high CLV customers



Increase the return on their marketinginvestment by reallocation of resources

Identify products to sell as bundlesSegmenting and profilingUnderstanding customer migration

k n praveen-customer lifetime value

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