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Hello, please see below. The first section is an article that must be read and used for this assignment. And the rest is the assignment instructions.
Customer Lifetime Value
Successful enterprises often build their businesses by creating customer lifetime value (CLV). From a company’s perspective, CLV is the value received by the company from each of its customers during their relationship. The success of a customer-centric strategy based on CLV will depend on how the company wins customer loyalty, its investment in marketing and the communication channels it chooses to adopt. Companies can foster customer loyalty by knowing what the customer needs and what they ignore. Having succeeded in creating loyalty, companies need to work on strengthening their customer’s relationships.
One way of doing this is by awarding additional complementary higher-value products. Another key factor to a company’s success is the ability to identify the current and potential customers that create value for the company. This helps managers to retain those customers who can create value for the company. Only by retaining valuable customers for long and profitable periods, can a company succeed over time.
It is quality rather quantity of customers that will have a larger impact on a business. Having the lowest prices in the industry does not make a winner automatically. The creation of customer loyalty not only enables the company to increase the net present value of its future profits, but also to enjoy the intangible benefits that emerge during the life of the customer.
The distinction between customer profitability and customer lifetime value is important. Customer profitability refers to the monetary gains from the customer’s economic transactions with the company, whereas customer lifetime value is a holistic view that encompasses both customer loyalty and the value of new customer referrals to the business. The principles of CLV allow companies to manage their customers more effectively and, in turn, to unlock shareholder value.
– Markus Heinen
Partner in the Advisory practice, Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft, Germany
– Daniel Gonzalez Mueller
former Advisor in the Advisory practice, Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft, Germany
– Iris Neundorf-lida
Manager in the Advisory practice, Ernst & Young, Austria
Assignment VI Customer Lifetime Value
Individual Assignment 6 Assignment VI.docx
Case study
Customer Lifetime Value (CLV)
Up to now we have focused much on the marketing and logistics of building a customer base, and selling a product or service to it and thus increasing customer value through marketing, customer service and good quality products and brands.
By reading the article in assignment 6 we can see how effective a strategy it is to project the profit each customer will generate over their lifetime with the company. Once this profit figure is established, CLV makes the loss of one customer much more real in monetary terms.
Assignment:
Apply the concepts in the article to the same company you have been using throughout the course. It is not necessary to calculate actual figures.
The objective of this assignment is – for you in the position of CEO – to realize that each customer has a projected future value to the company. The value can be diminished by many factors which we have discussed during the course. But the value can also be enhanced, hence adding value to the company and affecting shareholder value, which is a major responsibility for the CEO in publicly traded companies – and an expectation, by Wall Street.
Format: APA,
Assignment VI Customer Lifetime Value
Font: Times New Roman Size 12, there is no page length. Cover page and reference page are required.
It is expected that papers are written in the third person, contain the proper terminology as used in the text and in class, are spelling and grammatically correct – with a high level of clarity and are referenced appropriately. Refrain from pasting in excerpts from the textbook as this will diminish your grade and could be considered plagiarism – resulting in a failing grade.
As always, do a great job and I will be back for more. There are a lot more to come.
Thanks!
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