MN5F51FB Customer Value Management Level 4 Supply Chain Analytics


Customer's value management is a activity of analysis firm's client's view related to product and services that perceived value for money paid relative to their competitors buyers. It helps to accurately determine driving value of good for consumers and firm are measure rival performance and they align efforts, focus on available resources and create sustainable competitive advantage in current market place. In this report Homebase firm are selected in order to analysis customer's value. It is a British house improvement retail organisation. Homebase is established in the year of 1979 as Sainsbury holding firm. It run their business activities at global level with almost 255 store internationally but 214 retailer store are located in United Kingdom itself (Ascarza and et. al., 2016). They have sell diy tools, paints, outdoor living, kitchens, bathrooms, décor, gardening and many more with almost £1.4679 billion revenue in the year of 2013-14. In this assignment covers various components that enable of firm to calculate customer's lifetime value and benefits of clients lifeline values. It also covers influencing factors and types of market segmentation strategies.

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Task 1

P1 Components that enable calculation and determination of buyer's lifetime value

Management of Homebase used customer's lifetime value which are forecasting the value of business in long period of time. Through this, they are able to develop strategies and plan in order to enhance buyers satisfaction as well as profitability. No one know about how long firm's relationship with their clients may established. In order to know values management need to calculate CLV that may explain periodic value which helps to established relationship between firm and buyers (Chacour and Ulaga, 2015). For example, enterprises have established relationship for 12 months and value of this period is £abd. There are various kind of factors which able to affecting CLV. Some elements of CLV are explain as follows:

  • Present Value: Present value is a amount that are ready to pay customers in order to purchase product in current business environment. It is a rate of repetition of purchasing by potential clients. This factors are calculating by using time value of money as clients lifeline value is periodic cost which are depend on buyers retention for an organisation in long period of time.
  • Customer Loyalty: Customer loyalty in important element for firm that are helps to forecast sales unit as well as profitability. CLV is relies on individuals loyalty because it help to explain retention period with company product and services in long period of time in an effective ways (Kotler, 2017). For example, if buyer are loyal toward organisation and its commodities then they are connected with them in long period and if they can not satisfy enterprise goods then company provide high quality of services to them in order to gain higher satisfaction. If they fail to do so then clients can not purchase their product in next time. High loyalty factors mean more profits if less then it affect organisation performance negatively.
  • Mathematical Formula: In order to know customer lifeline value then management used numerical formula which helps to draw effective outcome in limited period of time. This mathematical expression provide more accurate value which helps to take decision related to product quality and services delivery method (Di Benedetto and Kim, 2016). It include various elements like total revenue, number of buyers and many more. For example, its calculated as total revenue / number of months where clients are joined their organisation. This method provide information related to profitability as well as individuals satisfaction form long period (Kumar and Reinartz, 2018). Average value of customer's lifeline helps management to take right decision related to run whole business activities in accurate manner. There are mathematical formula of CLV are explain:
  • CLV = ((T x AOV)AGM)ALT
  • Here; AOV = Average Order Value

T = Average Monthly transactions

ALT = Average customer Lifespan

  • In Detail:

Here; R = Monthly Retention Rate

D = monthly Discount Rate

  • Cohort Analysis: It means study of group of persons which have some kind of personality trait, perception, thinking about particular thing. This kind of cluster are available through segmentation strategies it can be realise on same time when they getting value of lifeline by an organisation (Keyte and Locher, 2016). It is a very time consuming process as more then one people may are analysis but variations create negative affect on this method that affect determination of clients life line values.
  • Individualized CLV: In order to gain high accuracy in CLV then firm used individualized CLV strategy, it help to focus on each and every single buyer behavioural as well as attitude which are bring in company along with their potential competitors. Management of Hombase used this method to calculate this in present and past information (Goetsch and Davis, 2014). It provide help to prepare presentation.

P2 Benefits of Customer Lifetime Value

In current business environment, there are several companies which have already start attention on CLV and calculated lifetime value to know consumers thinking about firm product and services. After evaluating customer's value where firm received positive outcomes then they accept truth of quality of this method then management apply this tool in their operational process in order to produce higher quality commodities.

It affect firm growth and revenue positively in long period of time and increase goodwill as compare to their competitors at market place. Company has stand out in high competitive environment, for this they are used strategies and techniques to produce differentiate product form others firm of same industry, it helps to gain competitive benefits at market place (Hammer, 2015). CLV is a latest method in current environment. By using this approach firm are improve their operations activities which help to enhance productivity and profitability. Some benefits of CLV are explain as follows:

Re-invent Royalty of Management – Through CLV firm are capable to improve quality of product and services which are helps to achieve high market share in same industry. It helps to enhance consumer's loyalty toward company. This value are provide information of those area those wants modification and improvement in order to serve better operations work. Better decision-making process are promoted by CLV as management of Himebase is redesigning their entire program which are helps to make quality of goods and services to sever society.

Price Setting – CLV strategies provide information related to consumers preferences, taste, needs and wants which helps management to set price of product and services in order to gain high market share as well as profitability (Weinstein and Pohlman, 2015). It helps to achieve goals and objectives in limited period of time in an effective ways with competitive benefits. Through this, firm are able to know clients purchasing capacity and spending amount in a particular section.

Better Forecasting – With the helps of customer's lifetime value with an organisation, management develop plan to forecasting future needs, wants and demand of clients which helps to take right decision related to operational activities and product modification so that higher profits could be generated in given time frame. Homebase used this strategy and increase their sales by 20% in a year and achieve predetermine goals and objectives it has calculated CLV in order to know all future chances of increasing sales as well as attracting lager number of clients toward firm goods (Kerzner and Kerzner, 2017) Referred company may also find out the growth chances of SMS services at market place, with the help to CLV, management of an organisation identify opportunities related to their requirement and demand of future forecasting.

Retention/Win Back of Customers – Through customer's lifetime value firm are able to identify current as well as future potential clients in order to increase SMS services by 20% it improve operational activities in an effective manner. By analysis needs and wants of consumers, accordingly firm develop strategies to full fill these demand in an effective ways. By identifying needs and fulling them effectively, organisation can win new clients along with retention of existing customers with in an organisation (Weinstein and Pohlman, 2015). It is very important for management to used strategies for produce high quality commodities which helps them to enhance customer's satisfaction as well as high profitability.

Effective Customer Segmentation – Through CLV, firm are identify their market segmentation which are help to gain high profits because after analysis needs and wants of buyers, enterprise can use this in their implementation process (Kumar and Reinartz, 2016). Through this, firm are able to produce customized commodities for their potential consumers. This tool helps to know where their clients are potential or not.

Homebase firm used CLV in order to forecast future needs and opportunities. This provide information related to how far customers relationship with organisation may go. Now days, customer's lifetime value in profitable for an organisation because it provide data those are linked with consumers . Through this method firm are able to improve operations activities and overall business for winning back buyers toward company.

P3 Factors that affect customer lifetime value

Customer lifetime value is helps to develop strong future relationship with their targeted consumers in limited period of time. Through this, marketing manager may identifying their loyal clients which provide higher profits and market position. It is used to analysis buyers purchasing behaviours and develop strategies accordingly. In addition to that, it assist whole business activities in taking right decision related to goods development, sales, promotion method, customer support and many more. CLV is a most effective tools that provide helps to an organisation in analysis buyers demand and convert them loyal customers as well as their worthiness of work process (Lee and et. al., 2015). It also assist to determine how value may changes with time. Form this, firm get higher profitability as compare to before and expend their business operations at global level.

Factors those affect Customer Lifetime Value are explain below:

What type of product you sell: Management of an organisation produce product according to client's needs and wants, it provide higher customer's satisfaction and market position. They are maintain long term relationship with their consumers so that gain high profitability and brand value. However, if company fail to provide required goods then it create negative impact on individuals and they are switch their brand with other one (Yang and et. al., 2012). For example, low as well as high product life cycle provide information related to future of that commodities at market place.

Service and Promise Level:Firm has promise with their buyers to provide safe and quality product which are the worth of their money. But many companies can not able to full fill their promises in an effective manner in order to retain their clients. It is very important for an organisation to committee only those promise that are firm able to full fill effectively (Leroi-Werelds and et. al., 2014). For example, when individual purchase a new car then auto mobile company provide them two free services as complementary and this promise are fulfil by car company in an effective manner, but if firm are not able to deliver their services effectively then it create negative impact on buyers mind and customer has disappointed and switch to other brand.

Market Stability: In current business environment, clients demands are continuously changes so that company may conducting research in order to analysis overall market that helps to full fill potential individuals needs and wants in an effective manner in given time frame. Frequently change in preferences and taste of consumers enable firm to modify their good according to market requirement (Martelo Landroguez, Barroso Castro and Cepeda-Carrión, 2013). For example, Jio has develop their new strategy in which they sell their services at low price as compare to their competitors which helps them to attracting large number of customers toward enterprises services. Through this, they gain competitive benefits at market place and higher profitability. Airtel is a one of the biggest competitors of Jio and they have lot of loyal customers that is a core competences of Airtel. They develop new strategies like high quality services and clients retention in order to survive in market place. But some other competitors like Aircel, decomo etc. sell their business to other big organisation.

Company's Objective: Company that have financially strong as well as strategically oriented has able to achieve their long term objectives in appropriate manner in limited period of time. Through this, they are able to gain long term view of buyers lifetime value. Firms that have high new worth has capable to produce higher quality product and services as per buyer needs, wants and requirement and they done continuously modification in their existing commodities in order to retain large numbers of potential clients (Martinsuo and Killen, 2014). For example, Apple has continuously modification their existing product by using innovation strategies, they launch 8 series and introduce new product of X series with the gap of two months. It is concluded that, they done modification according to current marker requirement and receive higher profitability.

Above mention factors affect customer lifetime value and play important role in order to attract large numbers of individuals toward firm product and services to rise profits in long period of time. Through this, enterprises are able to established strong relationship with their potential clients (Minnema and et. al., 2018). Therefore, each and every organisation want to consider all above mention factors through this they are promotes buyers loyalty as well as customers retention in long period of time in an effective ways. So that, it is necessary for an organisation to developing as well as implementing strategies related to create consumers life time value. Through this, they are achieve goals and objectives in limited period of time appropriately.

Lack of professionals: This factor describes the lack of professionals in some department of an organisation who are skilled in measuring customer's value. These experts used to carry out different techniques to measure such as mathematical formulae, retention of consumers, loyalty of them and so on. Thus, it is necessary for employers of Homebase to hire more professional in CVM team.

Difficult to calculate: In order to evaluate customers' value by using complex calculation formulae, professionals of CVM need to possess a perfect knowledge of mathematical terminology as per requirement. As, whole calculative part of measurement depends on formulae they used so, need to keep an eye on every step of calculation. Along with this, when there is large customer base of a company, then it will difficult to measure accurate value of CLV.

Online and offline channels: For making interaction with customers, it is necessary for management of Homebase to use latest techniques of communications. For this process, they need to understand concept of online and offline channels, usage of them with benefits and drawbacks. This would help in making good connection with consumers. In addition to this, before making connection, it is essential for employees of this company to have a complete knowledge of different kinds of products they are dealing with including price and quality. Thus, if management fails in any step of such kind of criteria then it will affect whole procedure of CLV as well.

Task 2

P4 Types of Market Segmentation Strategies applied to customer base

Market segmentation is a process of dividing target market into manageable group those have same kinds of needs, preferences, demand, perception and many more. Through CLV, firms have recognising clients and whom administrator want to address for their product and services. This segmentation that organisation does in order to make decision to identify employees for delivery quality of services and offerings. segmentation is a very important for an organisation, through this they are know customers demand as well as their purchasing power accordingly develop CLM strategies to convert offer into sales so that homebase has rise profits and achieve high market position (Raithel, Taylor and Hock, 2016). Division of target market into small group relies upon those who have same kind of personality characteristic, thinking, perception and many more.

It is a responsibility of marketing department they are segment their target market into two section one is person those can not use SMS services and second for those who have use this facilities. Both kind of group have different personality traits as well as perception toward Homebase product and services. This type of segment has helpful in taking appropriate decision related to sales and promotion CLM strategies as well as task. There are five management tactics are used to divide market in manageable group. These factors are explain as follows:

Demographic: It is most common method of dividing market, it can be used by each and every companies whether they are big or small in nature. In each one location population are has same kind of social culture environment and behaviours traits which affect firm performance on that area. Thus includes religions, age, gender, education level, social class, job, marital status and many more. Through this segmentation, Homebase are hire talented employees which have capabilities to produce innovative and high quality goods in order to satisfy buyers needs and build higher CLV in an effective ways (Ramaswami and Arunachalam, 2016). The company want to increase their clients portfolios which are use SMS facilities for this they are focus on those person who have need of text messaging which are relies on age factors. If company have large number of clients then management develop demographic segmentation CLV otherwise on less profits they can not use this facilities.

Geographic: If management want accurate data and information related to clients needs, perception, behavioural, motivation factors and many more then they use geographic segmentation CLM plan in order to focus on specific target market. This can be explain as, manage find out sufficient number of potential buyers those have enough purchasing power. Accordingly Homebase develop CLV strategies to provide quality of network services but due to geographical issue some time networking issues are arise which create negative impact on individuals and they switch brand with another one (Rihova and et. al., 2015). With this reason the company ca not provide SMS facilities in these kind of location. In this condition firm can not provide their services in that area where no option of using services with out of low network facilities. So that management may consult with United kingdom government in order to reduce network difficulties and then they sell their SMS services to person those has purchasing power.

Psycho-graphic: Each and every person has different kind of behaviour, habit, lifestyles, interest and many more that shows their psychology. Management want to want to consider CLM as well as CLV and accordingly develop plan to attract large number of customers toward firm product and services. This kind of segmentation has focus on fashion, attractiveness and brand etc. in exchange of money as well as alternatively of value of commodities. In this section person can not conservative in nature as well as thoughts and they impoverishment in their luxurious lifestyles. It also includes kind of personality, attitudes, values, societal status, interest of clients, beliefs and many more.

Behavioural: Every person have different kind of behaviours and management of an organisation consider this when they develop strategies and plan in order to achieve goals and objectives in limited period of time in appropriate ways. CLM concept is new for current market environment where digitalisation get boom and most of the company used this approaches to run their whole business CLV profits in an effective manner (Schwepker Jr, and Ingram, 2016). They are take assistance of digital equipments and technology which helps to run operations accurately. This type of segmentation can be done by survey, make market report, trends etc. Management has also consider sensitivity of price as well as their brand image in client's mind and benefits that provide future profitability.

Combination Strategy: It is a most important strategy, most of the company are used combination of plan of action it is a prominent tactic which are used by organisation to enhance their sales volume by 20% in per year with the help to processing SMS facilities. In current business environment, firms are can not executing single CLM plan with in work place but they select multiple tactics as per their requirement through this they are capable to achieve their target in specific period of time.

From above mentioned segmentation procedure of determining needs of customers in proper manner, management of Homebase Company are needed to use STP model also. This model includes three steps which aid in analysing what they are offering to people at marketplace as well as way of interaction to provide them complete information of products. STP stands for:- Segment market era; Target customers to complete their demands; Position what to offer. In context with market segmentation, concept of this model can be explained as:-

  • Segmentation: In order to meet demand of each customer cost-effectively, market segmentation helps in evaluating needs of them in proper manner. For this process, segmentation can be done in different ways on the basis of demographic, geographic, behavioural and psycho-graphic also. Thus, it will provide a huge advantage to a firm over its competitors who use 'one size fits all' kind of approach to determine demands of customers.
  • Targeting: After dividing customers on different bases, now a firm needs to decide which part they need to target so that maximum benefits can be gained. Under this process, managers of Homebase Company are required to look at beneficial part of each segment i.e. which consumers' segment contribute most to their bottom line. After then, analysing size as well as potential growth of each group by making a comparison with other segment. In last process, they need to evaluate how well association is able to complete demand of selected group so that targeted customers can be decided.
  • Positioning: This is the last step in which goal of a firm is identify how it needs to position the products for targetting the most valuable segmented part. Further, managers are needed to select the best marketing mix technique to make a comparison with competitors. This would help in gaining attraction of customers by offering them products on different price rates.

P5 B2B and B2C models of decision making and opportunities value creation can be applied

Decision – making process of management of an organisation is based on type of business judgement which affect performance as well as productivity in long period of time. There are two kind of business B2B and B2C both have their own strength and weakness. The Homebase firm continuously change their decision method according to market situations through this, they gain effectiveness of task (Stark, 2015). Better system of judgement can help to achieve objectives in limited time. Mainly two different type of decision-making model that Homebase are used to develop strategies and plan is Business to Consumers and Business to Business. Both kind of method are explain as follows:

Decision Making Models:

Decision making models












Classical model of decision making intuitive and rationale

In today's fast developing world, people in organisations are facing various problems in decision-making process in day-to-day operations. In this manner, rationale and intuitive decision-making making approaches helps in solving such kind of problems. When information is not available in proper form and decisions are so difficult to take, then in such condition it is better to take intuition approach. While on other hand, rational decision-making approach is used when a company use facts, a step-by-step procedures and facts to come on a decision.

Through this, firm are able to take effective decision. Business to consumer is a one of the oldest method of run business and they use rational decision making approaches. Management has used this method to clearly identify issues which positively affect judgement - making process. It is beneficial for small enterprises where goals and objectives of the company are clearly define. This model in generally used by small enterprises whose business is based on short-term goals. It will help them in defining problem; identifying criteria of decision; allocating weights to the same; develop alternatives as well as select the best among them.

It is a new of completing task of business which are related to operations activities and it can not belong to decision making process. This this, problem are very complex in their nature which are negatively affect performance and productivity in long period of time. It is large scale business operation and also do not have proper objectives for organisation. Big organisation can not clearly define their operational objectives in a proper manner. In case of large organisations, intuitive approach of this model is more useful. As in such businesses, managers are not needed to observe on different components before taking decisions.

Administrative Man Model or bounded rationality model

Instead of identifying all alternatives of possible solutions, administrative model used to find one solution at a time. This model is based on perception of human resource in a firm as whatever decision they made will demand greater information, processing capabilities and time. Thus, it based on concept on sequential attention, heuristic and satisficing i.e. to select a best alternative which is satisfactory under a certain situation.

In this, model includes target succeed (Weinstein, A. and Pohlman, 2015). It is important for management to consider all essential alternatives. B2C can be small and large in their working style so that under this kind of alternative has create minimum impact on performance. This model helps in taking such decisions which affect productivity and overall performance of a company.

There are involvement of management in decision - making process to achieve goals and aim in a systematic ways. There are various option are available for manager in order to examine them. This model is used to take decisions which is beneficial in context with business profitability.

Retrospective decision making model

This decision-making model also known as implicit favourite model which concerns on managers attempt to rationalise their alternatives they have selected in a particular situation. Thus, it will help in making justification by the guise of scientific rigour.

Under this area company are trying to convenience clients for purchasing firm goods and services in reasonable price. In decision-making process, employers of a company are needed to look out several factors like technical, operational, personal values, psychological assessment, judgemental capabilities and more which affect the same.

In this, business man can not want to go anywhere because clients itself come for purchasing commodities and services (Wouters and Kirchberger, 2015). In large sectors, some errors occur in decision-making procedures due to indecisiveness, postponing the decision until last moment, a failure in isolating root cause behind a problem as well as failure in assessing reliability of source of information.

Task 3

P6 Different techniques and methods can apply to increase customer relationship and loyalty

It is an main purpose for enterprise to have a strong base of consumers for introducing their footprint within a market. For achieving better outcomes, aid in meeting loyalty of buyers is important for organisation to meet competitive benefits within a marketplace. Some organisation can give quality of services by targetting consumers according to their demand and needs. Additionally, customers which are loyal aid in giving various advantages to organisation in which they easily increasing their level of performance at a place of market as well as take a strong place from their competitors. In the context of company, administration give different and quality of services to its buyers for achieving higher level of satisfaction.

Different techniques and tools are their as it is used by them for improving customers relations along with that make a strong relations between users as well as organisation (Chacour and Ulaga, 2015). As they are an main assets for enterprise due to purchasing a organisation goods and services on regular basis. In order to understand it in a better way all methodologies there are certain points which are discussed in detail below:

  • Emails: Management of customers relations is one of an main aspects for each enterprise for achieving success within a market. It is necessary to establishing and improving strong connections. In this organisation receive and send emails for contracting with each other.
  • SMS: It is an proper facility in which an specific sent a message to other. This approach used by every person. They do not require internet for making a good connection. By the help of organisation it aid in making a good relations with buyers. It is an easy approach in which consumers can easily send their negative and positive thoughts for firms. It assist in making a good bond with their buyers as well as improve the level of performance.
  • Telephone: It is necessary and conversation of dual party in which two people can talk at a same time. These both parties are solve their problems as well as take a answer immediately from other person (Ascarza and et. al., 2016). Generally, it is a wide network which solve problems and fast actions within a span of time. Through this company can easily make better relations with their consumers.
  • Internet: As per present scenario, it is a network of world wide as it make a various numbers of persons can use the sites of social networking for connecting with one others. By this organisation promote easily their services on the websites for giving the proper information to a huge numbers of consumers in an proper manner. It aids in performance improvements at a same time and along with that it enhance the base of customers of Homebase at a place of market.

All these strategies are used by Homebase organisation to increasing their base of consumers by introducing strong connections with customers. It aid in achieving a competitive advantages at a place of market by enhancing their market share from their competitors. By implementing several tools and techniques, firm are able to get higher customer's satisfaction in long period of time. According to current market, social media marketing has very attractive to get attention of large number of individuals toward firm goods as well as services to build positive brand image in customer's mind.


From the above report it is concluded that customer value management stands crucial to an organisation as it leads to measurement of perceived value by customers. Management of Homebase develop plan in order to evaluating customers lifetime value they can select best method according to their requirement. There are various benefits as well as factors which affect firm performance and profitability in long period of time.

You may also like to read: 


  • Ascarza, E. and et. al., 2016. In Pursuit of Enhanced Customer Retention Management: Review, Key Issues, and Future Directions.Customer Needs and Solutions. pp.1-17.
  • Chacour, S. and Ulaga, W., 2015. Customer Value Audit in International Business Markets: A Strategic Marketing Tool. InProceedings of the 1998 Academy of Marketing Science (AMS) Annual Conference. (pp. 505-506). Springer, Cham.
  • Di Benedetto, C. A. and Kim, K. H., 2016. Customer equity and value management of global brands: Bridging theory and practice from financial and marketing perspectives: Introduction to a Journal of Business Research Special Section.Journal of Business Research. 69(9). pp.3721-3724.
  • Goetsch, D. L. and Davis, S. B., 2014.Quality management for organizational excellence. Upper Saddle River, NJ: pearson.
  • Hammer, M., 2015. What is business process management?. InHandbook on Business Process Management. 1.(pp. 3-16). Springer, Berlin, Heidelberg.
  • Kelly, J., Male, S. and Graham, D., 2014. Value management of construction projects. John Wiley & Sons.
  • Kerzner, H. and Kerzner, H. R., 2017.Project management: a systems approach to planning, scheduling, and controlling. John Wiley & Sons.
  • Keyte, B. and Locher, D. A., 2016. The complete lean enterprise: Value stream mapping for administrative and office processes. Productivity Press.
  • Kotler, P., 2017. Customer value management. Journal of Creating Value. 3(2). pp.170-172.
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