Customer Lifetime Value (SMALL BOOK 167-177) * Customer lifetime value (CLV), is the net present value of the cash flows attributed to the relationship with a customer. * The use of customer lifetime value as a marketing metric tends to place greater emphasis on customer service and long-term customer satisfaction, rather than on maximizing short-term sales. * Two approaches to CLV: * Disaggregate (“spreadsheet”)– Complex and cumbersome, but allows you to build in any assumptions
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Case Study: Conroy’s Acura: Customer Lifetime Value and Return on Marketing Case Summary: Conroy’s Acura was founded in November 1986 by Ross Conroy, a veteran of the car industry who also owned a General Motors dealership to open in Toronto and one of the first in North America. Located in downtown Toronto, Conroy’s Acura sold both new and pre-owned vehicles, and its service department was dedicated to Acura Products. Conroy’s Acura was an independently owned dealership that held a franchise
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Vol. 27, No. 4, July–August 2008, pp. 585–599 issn 0732-2399 eissn 1526-548X 08 2704 0585 informs ® doi 10.1287/mksc.1070.0319 © 2008 INFORMS Practice Prize Report The Power of CLV: Managing Customer Lifetime Value at IBM J. Mack Robinson College of Business, Georgia State University, Atlanta, Georgia 30303, dr_vk@hotmail.com Darden Graduate School of Business, University of Virginia, Charlottesville, Virginia 22904, venkatesanr@darden.virginia.edu Americas Market Intelligence, IBM
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In 2010, BBVA was the second largest bank in Spain (48 million customers and 104,000 employees). Through an acquisition, it entered the US market in 2004. By 2009, it had established itself as the fifteenth largest commercial US bank and a significant regional player in the Sunbelt region. BBVA has three primary lines of business: retail banking for consumers and businesses, corporate and commercial banking, and wealth management. Their goal is to become one of the top-10 banks in the US
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Question 1 1) The lifetime value of a typical customer in each segment when the discount rate is 15%. * Exhibit 1 shows that the customer lifetime value for each segment with a 15% discount rate. * The lifetime value of a typical customer in the platinum( top 20%) segment is worth $3496. * The lifetime value of a typical customer in the platinum( low 80%) segment is worth $2394. * The lifetime value of a typical customer in the gold ( top 20%) segment is worth $1415.
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It’s year 2009 and HubSpot has reached its 1000 customer milestone. Although this milestone was a great achievement for the 3 year old start- up company, they have a problem on hand. HubSpot needs to decide on which segment to focus on: “Owner Ollies” (OO), “Marketer Marys” (MM) or both. Although a focus on one segment or the other might allow HubSpot to create efficiencies and help them increase their acquisition rate within that segment, our analysis has led us to conclude that they should continue
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minimizing costs are ways to boost profits. The article “Managing Customer Value” suggests that customers might be the key to improve profits. Customers are assets to firms; they generate revenues. However, some assets generate more revenues than other. In order to foster maximum returns from the customers, it becomes imperative to understand the differences between customers groups. Recognizing this diversity will enable value extraction from the investments. Unfortunately, most companies are
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Internet Customer Acquisition Strategy at Bankinter Bankinter is a small independent national Spanish bank founded in 1965 and operating through various customer acquisition networks and distribution channels. Among their competitors, which are traditional brick-and-mortar banks and Internet-only banks, Bankinter positions itself as innovative, multichannel and low-cost provider of financial services. In 1992, Bankinter started to change its strategy by closing some of its branches and focusing
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a cohesive brand image to optimize the customer profitability and lifetime value. The majority of Rosewood customers do not know that they are staying at a Rosewood hotel or even recognize the Rosewood brand. The new CEO John Scott recognized that the Rosewood brand had log recognition and brand-wide usage among guests and was an untapped asset. To increase the company’s value, Rosewood needs to increase the profitability of the current and future customers. It needs to develop a way to enable consumers
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MindGrip® Pens[pic] Introduction La Innovators International launches its sensational new product ‘MindGrip’ range of pens. ‘MindGrip’ pens represent a new milestone achieved in the technology space and is bound to grab eyeballs and will develop a market for itself owing to its unique product proposition and the comprehensive plan chalked out by the marketers at La Innovators International. ‘MindGrip’ is basically a unique new pen gadget which catches the brain waves while one is thinking
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