Customers lifetime value

Rust, R., Zeithaml, V., emd Lemon, K. (2000), Driving Customer Equity How Customer Lifetime Value Is Reshaping Corporate Strategy, Free Press, New York. 

Summarizing, it can be said that using portfolio models for qualitative customer segmentation offers an effective and rather simple way of evaluating the allocation of resources to specific customers (Terho and Halinen 2007). Moreover, it is also an appropriate option to combine qualitative and quantitative dimensions, for instance, by considering customer lifetime value (CLV) (Campbell and Cunningham 1983). 

Jain, D., Singh, S. S. (2002). Customer lifetime value research in marketing a review and future directions. Journal of Interactive Marketing, 16(2), 34-46. 

Kim, S.-Y., Jung, T.-S., Suh, E.-H., Hwang, H.-S. (2006). Customer segmentation and strategy development based on customer lifetime value a case study. Expert System with Applications, 31(1), 101-107. 

Before we outline the techniques and models to be used, it is appropriate to consider a number of contemporary measurements that will help establish and confirm the business case. A critical doctrine of CRM is that it is substantially more efficient to maintain current customers than to acquire new ones. A measurement such as customer turnover rates, or what has been termed as churn, is often used to justify the substantial expenditures required for a CRM implementation. Emerging from this idea are new measurements, such as customer lifetime value and customer ROI, that attempt to relate the long-term value and profitability of a customer to the cost of maintaining the relationship. As the business case is constructed, other traditional measures should also be used. 

Finally, it has to be noted that whatever the detection chain used, the overall efficiency of the system is rarely constant over the whole acquisition range. The wavelength-dependent efficiency is not always taken into account in the published data. This has a priori no effect on the lifetime values but renders difficult any comparison of emission spectra from one laboratory to another. Certified data are increasingly needed and requested by institutions, customers and the public. In the future more attention should be paid to corrected spectra, controlled data etc, even in basic research. 

At the maximum, ISE professionals would be part of the CRM program team. This would involve designing the strategy, working on information systems, and thinidng through how to deploy CRM data and information to achieve alignment and optimize the lifetime value of the customer. 

The essence of business is to create satisfied customers who purchase your products and services and come back for more, and products that do not come back. The lifetime value of a customer is often overlooked in the day-to-day strategic and operational decisions. But this lifetime value is the critical issue for understanding why investments in service quality and customer satisfaction are not just expense fines in some budget but investments in bottom-Une profit and the future of the company... 

The importance of customer retention is underlined by the concept of the lifetime value of a customer. The lifetime value of a customer is calculated as follows ... 

Lifetime value = Average transaction value x Yearly frequency of purchase X Customer life expectancy ... 

The duration ofthese tests, of course, strongly depends on the application. The typical duration of a car engine does not exceed 2 000-4 000 h with a lifetime, normally, of 10 years. Higher values are required for trucks of course. For residential heating systems, the durability required is usually in the range of at least 20 000 h and the reliability requested by the customer is even higher for obvious reasons. 

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