Services Relationship Marketing/Module 6

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Week 6/Module 6[edit | edit source]

One important topic to consider this week is the customer lifetime value (CLV) calculation. An organization can take into account how much a consumer is worth based on the number of visits, amount spent per visit, and the expected lifetime of the customer. We can then use this amount to determine how much we are willing to spend obtaining customers for that location. This would allow us to determine at what point in the life of the customer would we hit the break-even and begin making more money than initially spent to acquire the customer.

An exercise in this might be to think of a restaurant you go to and decide how frequently you visit. How much do you spend per visit when you attend this location? An overly simplified calculation might be to multiply the average amount spent by the number of visits to see the yearly value. How long will you be a customer of this location? There are some products consumers are expected to use for a shorter or longer period of time than others; make sure to consider what these might be and what influence this might have on the CLV calculation.

There are some examples out there of organizations “firing” their customers because the cost to service them is much higher than the amount of money collected for the product or services. There was a wireless carrier who did this a few years back based on consumers who called into the call center too frequently. This makes for an interesting discussion about the “WORTH” or value of consumers to an organization and factors that influence that value.

TOPIC[edit | edit source]

Customer Service and Motivating

Customer Lifetime Value (CLV)

Weekly Objective[edit | edit source]

Understand CLV and why we might consider evaluating how much customers "COST."

Activity/Scaffolding[edit | edit source]

Chapter 9 Motivating

Activity/Deliverable[edit | edit source]

Students will submit the Business Proposal of the group project. This document will include the following: 1) Introduction, 2) Business overview, 3) Proposed measurement for customer service at that location (what, who, frequency, location, other specifics), 4) Written permission from the manager or owner, 5) reference page.

NOTE to students: The instructor may verify permission. Please provide contact information including Name, phone number, and email to ensure your permission can be verified.

Additional Reading[edit | edit source]

You might find this additional reading helpful: