Unit 38: Customer Value Management
Unit code L/508/0597
Unit level 5
Credit value 15
Introduction
·
This
unit is designed to enhance students’ knowledge and understanding of why it is
important for marketers to enhance and manage the value of the customer
interactions. Students will learn the underpinning theories and frameworks, and
will also be expected to relate these to real-world examples, including their
own personal experiences.
·
Organisations
ideally seek a mutually beneficial relationship between themselves and their customers.
This is particularly important when considering the costs associated with
acquiring a new customer. It has been suggested that it can cost five times as
much to gain a new customer as it is to retain an existing one. Moreover, there
is no guarantee that a new customer will be as loyal as a current one. Any
organisation, whether for profit, NGO or a charity, seeks ways of retaining
customers through enhanced customer experiences.
·
In
order to retain loyal (and profitable) customers, organisations seek to
understand them better. By understanding customers through the capture of
relevant data, organisations can enhance a customer’s lifetime value. They then
aim to build a relationship with the customers where they remain loyal and
continue to purchase a range of products/services.
·
The
knowledge, understanding and skill sets that students will gain on successfully
completing this unit will enhance their career opportunities; whether setting
up in business independently or being employed by an organisation.
Learning
Outcomes
By the end
of this unit a student will be able to:
1. Demonstrate an understanding of the
concept of customer lifetime value, how to calculate it and the different
factors that influence it.
2. Evaluate the different segments in a
customer base and the appropriate opportunities for customer value creation.
3. Analyse appropriate techniques and
methods in order to increase customer lifetime value.
Essential
Content
LO1
Demonstrate an understanding of the concept of customer lifetime value, how to
calculate it and the different factors that influence it
Traditional
concepts of marketing compared with those of value and retention:
·
Customer
value, satisfaction and retention. Customer Lifetime Values (CLVs).
·
Merits
of CLVs.
·
Value
of customer data. Measurement and analysis of CLVs.
·
How
to calculate and increase your customer lifetime value:
·
Determining
your customer acquisition costs, repeat transactions and customer retention
rate.
·
Calculations
applied to calculate customer lifetime value. Creating balance in the business
model
·
Factors
influencing CLVs:
·
CLVs
within both B2C and B2B contexts. Customer experience and how it can affect
CLVs.
LO2 Evaluate
the different segments in a customer base and the appropriate opportunities for
customer value creation
Marketing
segmentation:
·
The
role of segmentation, targeting and positioning (STP) to identify lifetime
value opportunities.
Identification
and diagnosis of value creation opportunities:
·
Customer
perceptions: section, nature of stimulus, expectations, motives and selective
perception.
·
Consumer
imagery: product and service positioning, price/quality relationships,
company’s image.
·
How
consumers store, retain and retrieve information. Involvement theory and consumer
relevance.
·
Measures
of consumer learning: recognition and recall, responses to media, brand
loyalty.
·
Perceived
risk: How customers handle risk. Acquisition costs in relation to CLVs.
·
Basic
B2C and B2B decision-making models.
LO3 Analyse
appropriate techniques and methods in order to increase customer lifetime value
(e.g. cross-selling, loyalty and upselling)
Strategies for
enhancing customer lifetimes values within both B2C and B2B contexts:
·
Strategies
for building long-term customer relationships
·
Digital
strategies, including increased connectivity with customers through mobile
device, apps, social media and online chats/forums.
·
Use
of advanced technology such as ‘Internet of Things’ and Cognitive systems to
gather real-time data and predict and forecast market trends.
·
Creating
brand loyalty. Cross-selling and upselling.
·
Choosing
the right rewards and incentives. Developing multiple points and channels of
contact.
Learning
Outcomes and Assessment Criteria
|
Pass
|
Merit
|
Distinction
|
|
LO1 Demonstrate an understanding of the concept of
customer lifetime value, how to calculate it and the different factors that
influence it
|
|
|
P1 Explain
and analyse the various components that enable an organisation to determine
and calculate a customer’s lifetime value.
P2 Explain
and justify the benefits of customer lifetime value to an organisation.
|
M1 Apply the
concept of customer lifetime value and the use of collating customer data
within a specific organisational B2C or B2B context.
|
LO1, LO2 and LO3
D1 Provide evidence of critical evaluation and
synthesis of the key concepts of customer lifetime value management in an
organisational context.
|
|
P3 Evaluate
the factors that influence the customer lifetime value.
|
|
|
|
LO2 Evaluate the different segments in a customer
base and the appropriate opportunities for customer value creation
|
|
|
P4 Determine
and explain the types of market segmentation strategies that can be applied
to a customer base.
P5 Evaluate
B2C and B2B decision-making models and demonstrate how opportunities for customer
value creation can be applied.
|
M2 Critically
evaluate various segmentation models in a B2C or B2B context to generate key
insights and marketing intelligence for customer value creation.
|
|
|
LO3 Analyse appropriate techniques and methods in
order to increase customer lifetime value
|
|
|
P6 Analyse
the different techniques and methods organisations can apply to increase
customer relationships and customer loyalty.
|
M3 Evaluate
the appropriateness of techniques and methods applied at different stages of
the consumer decision- making process and CLV.
|
|
