K N Praveen-Customer Lifetime Value
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Transcript of 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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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Increase the return on their marketinginvestment by reallocation of resources
Identify products to sell as bundlesSegmenting and profilingUnderstanding customer migration