Download or read book What to do with Unprofitable Customers Customer Lifetime Value Customer Metrics of Adverse Behavior and Feasible Strategies for Managing Unprofitable Customers written by Anna Balashova and published by GRIN Verlag. This book was released on 2017-05-23 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: Bachelor Thesis from the year 2016 in the subject Business economics - Offline Marketing and Online Marketing, grade: 1,3, University of Münster, language: English, abstract: In this paper, I analyze how customer metrics like Customer lifetime value (CLV) are linked to strategies for managing unprofitable customers. Valuing customers or their behavior, respectively, has become an indispensable issue for any commercial activity. When determining causes and reasons of the customers’ contribution to firm value or performance, the customer base usually is analyzed and evaluated, whereas profitable and unprofitable customers are identified. Especially the subject of unprofitable customers, the methods to single them out and their input on the firm’s financial performance have been thoroughly discussed in the literature. Because regular financial metrics have restricted diagnostic potential, relying on customer metrics appears more suitable for determining customer’s profitability. There are diverse methods for evaluating customers, such as previous period customer revenue, past customer value, customer lifetime duration and customer lifetime value (CLV). CLV examines customer profitability from a prospective perspective, foreseeing future customer behavior and discounting future cash flows. CLV and its measurement models, depending on the kind of customers and products obtained by the company, provide a basis for strategic and tactical decisions. Customer’s persistent adverse behavior can lead to unprofitable outcome and should be considered by determining profitability on the base of CLV. There are several strategies for handling unprofitable customers. Before applying one of these, it is necessary to measure potential benefits and losses, as the chosen strategy can have a longrun effect on the firm’s clientele. There are some interconnections between various CLV measurement models, other customer metrics and strategies applied to unprofitable customers.

Download or read book The Right Way to Manage Unprofitable Customers written by Vikas Mittal and published by . This book was released on 2020 with total page 10 pages. Available in PDF, EPUB and Kindle. Book excerpt: Problem customers can cost your business lots of money, but quickly ejecting them may not be the best way to relieve the burden. Mittal, of Rice University, Sarkees, of Penn State, and Murshed, of Towson University, explore the ins and outs of customer divestment. Using real-world examples, the authors show how deciding to end a relationship with a customer segment or individual can increase profitability, improve employee morale, address capacity constraints, and bolster a business strategy. However, divestment also comes with potential downsides for various constituencies, including employees and remaining customers, both of whom may wonder whether they're next. In addition, ethical and legal consequences -- and the risk of bad publicity -- always loom. Before you rush to action, say the authors, walk through their five-part customer divestment framework. First, reassess the context of present customer relationships, looking beyond simple profitability. You may find that the most productive option is to educate customers rather than drop them. In some cases, if you renegotiate the value proposition with them, both of you will win. In other instances, you'll want to migrate customers to other subsidiaries or providers, as long as the move is undertaken -- and perceived to be conducted -- in good faith. If it becomes necessary to terminate a customer relationship, use a direct, interpersonal approach. No business can afford to squander its customer base, so divestment should not be boiled down to determining merely who is profitable and who is not -- the strategic consequences are too weighty. In the end, the decision about whether to divest might prove to be the toughest customer of all.

Download or read book Strategic Value of High Cost Customers written by Upender Subramanian and published by . This book was released on 2013 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This is the online appendix to the paper titled "Strategic Value of High-Cost Customers" that is forthcoming in Management Science. The abstract for the paper is given below. This online appendix provides the proofs for extensions when customers are forward-looking, when there are three customer cost-types, when firms can discriminate amongst their ex-customers, when customers exhibit inertial loyalty or brand loyalty, when customers also differ in their price-sensitivity and when some customers are too costly to serve. Many firms today manage their existing customers differentially based on profit potential, providing fewer incentives to less profitable customers and firing unprofitable customers. While researchers and industry experts advocate this practice, results have been mixed. We examine this practice explicitly accounting for competition and find that some conventional prescriptions may not always hold. We analyze a setting where customers differ in their cost-to-serve. We find that when a firm can discriminate amongst its customers while the rival cannot, customer base composition influences the rival's poaching behavior. Consequently, even though a low-cost customer is more profitable when viewed in isolation, a high-cost customer may be strategically more valuable by discouraging poaching. Therefore, contrary to conventional advice, it can be profitable for a firm to retain unprofitable customers. Moreover, some customers may become more valuable to retain and receive better incentives when they are less profitable. We further show that, in competitive settings, traditional customer lifetime value metrics may lead to poor retention decisions because they do not account for the competitive externality that actions towards some customers impose on the cash flows from other customers. Our results suggest that firms may need to evolve from a segmentation mindset, which views each customer in isolation, to a customer portfolio mindset, which recognizes that the value of different customers is interlinked.

Download or read book Managing Customers Profitably written by Lynette Ryals and published by John Wiley & Sons. This book was released on 2009-01-22 with total page 384 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book is a response to a need in the market place in the fast-growing field of customer profitability analysis and the profitable management of customer relationships. It combines innovative approaches to calculating the value of customers, with the management strategies necessary to make and keep customers profitable. It includes easy-to-follow instructions on how to calculate customer profitability, including worked examples (non-technical) and discusses strategies and their applications for organizations to manage customers profitably. Based on cases and feedback from the KAM Club and other research, there will be many business-to-business as well as business-to-consumer examples. The book assumes some level of numeracy in its readership. The contents include: Assessing product costs, costs to serve and how these can be estimated, and how to deal with customer-specific overhead costs. It discusses the uses and limitations of the use of customer profitability analysis, and illustrates how to calculate customer lifetime value using two methods, one with actual numbers and one which estimates relative customer lifetime value. Provides an innovative approach to calculating the lifetime value of a customer by taking risk into account. Demonstrates how to recognise and value the relationship benefits of customers, such as word of mouth. Brings into discussion the idea that how customers are managed, links to their profitability. Describes how financial portfolio analysis and theory apply to marketing and how, their application to marketing relates to the optimisation of marketing spend.

Download or read book Encyclopedia of Business Analytics and Optimization written by Wang, John and published by IGI Global. This book was released on 2014-02-28 with total page 2862 pages. Available in PDF, EPUB and Kindle. Book excerpt: As the age of Big Data emerges, it becomes necessary to take the five dimensions of Big Data- volume, variety, velocity, volatility, and veracity- and focus these dimensions towards one critical emphasis - value. The Encyclopedia of Business Analytics and Optimization confronts the challenges of information retrieval in the age of Big Data by exploring recent advances in the areas of knowledge management, data visualization, interdisciplinary communication, and others. Through its critical approach and practical application, this book will be a must-have reference for any professional, leader, analyst, or manager interested in making the most of the knowledge resources at their disposal.

Download or read book Kim McDonald written by and published by . This book was released on with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Marketing of High technology Products and Innovations written by Jakki J. Mohr and published by Pearson Prentice Hall. This book was released on 2010 with total page 584 pages. Available in PDF, EPUB and Kindle. Book excerpt: This title provides a thorugh overview of the issues high-tech marketers must address, and provides a balance between conceptual discussions and examples; small and big business; products and services; and consumer and business-to-business marketing contexts.

Download or read book Customer Lifetime Value written by V. Kumar and published by Now Publishers Inc. This book was released on 2008 with total page 111 pages. Available in PDF, EPUB and Kindle. Book excerpt: Customer Lifetime Value - The Path to Profitability provides methods to measure CLV, strategies for developing customer-centric strategies, explains the implementation of CLV strategies in a B2B and B2C setting, and examines the challenges faced by an organization in implementing a CLV-based framework.

Download or read book An Investigation of Customer Lifetime Value Factors written by Steffen Frank Zorn and published by . This book was released on 2010 with total page 235 pages. Available in PDF, EPUB and Kindle. Book excerpt: [Truncated abstract] As market competition grows through deregulation, new technologies and new competitors, churn rates the percentage of customers quitting their relationship with a company grow to up to 30% per year. Due to high churn rates, firms must acquire new customers constantly just to stay even. Yet acquiring new customers is costly and not every acquired customer is profitable. Acquisition costs can be higher than customer lifetime revenues, particularly for short-term customers or buyers of small quantities of low-margin products. A long-term customer, usually less costly to serve because of possible exchange efficiencies such as less time to explain a new product, often generates more revenue than recently acquired customers. Yet not every customer merits keeping. Those buying only when discounts are on offer, buying low value items infrequently or whose needs are hard to serve could be unprofitable and harm a firm. Therefore companies seek to identify and reduce the churn rate of valuable customers, and to acquire loyal and profitable customers. As a first step, companies must quantify existing and potential customer's value in order to increase customer lifetime value (CLV), the discounted difference between a customer's revenues and sales costs. This focus on CLV requires a change in company perspective, away from transactions and toward identifying, acquiring and retaining profitable customers. Identifying profitable customers requires knowledge about customer traits relating to high profitability. Information technology provides voluminous customer data, for example, an individual's revealed preferences rather than intentions. Firms can use this data to identify characteristics of valuable customers to retain profitable customers and to target new prospects with similar characteristics. As customers are a heterogeneous asset, firms should investigate how individual factors such as consumption behaviors and perceptions influence CLV and how marketing activities relate to these factors. For example, customers differ in motivations to consume. Some consume media randomly to kill time, others consume selectively in a goal-directed manner. These different consumption motivations could influence CLV and subsequent marketing activities. For academia it is important to understand how behavioral and attitudinal differences such as the importance of satisfaction relate to customer likelihood to engage in or dissolve a relationship with a firm. Furthermore literature shows a research gap in understanding how consumption modes and other customer characteristics relate to CLV, and how marketing activities influence these customer characteristics. Most CLV models omit marketing activities. Differentiating customers according to marketing activities and consumption preferences could help firms improve CLV predictions, allocate resources to acquire valuable prospects and retain valuable customers. The relationships between consumption modes and CLV should reveal another aspect of consumer behavior, the importance of consumption modes in customer relationship management...

Download or read book Managing Customers for Profit written by V. Kumar and published by Pearson Prentice Hall. This book was released on 2008 with total page 318 pages. Available in PDF, EPUB and Kindle. Book excerpt: Leading marketing expert V. Kumar shows how to use Customer Lifetime Value (CLV) to target customers with higher profit potential...manage and reward existing customers based on their profitability...and invest in high-profit customers to prevent attrition and ensure future profitability. Kumar introduces customer-centric approaches to allocating marketing resources for maximum effectiveness...pitching the right products to the right customers at the right time...determining when a customer is likely to leave, and whether to intervene...managing multichannel shopping...even calculating a customer's referral value.

Download or read book Managing Customer Value One Step At A Time Second Edition written by Dilip Soman and published by World Scientific. This book was released on 2022-05-10 with total page 414 pages. Available in PDF, EPUB and Kindle. Book excerpt: How do you take an individual who has never done business with your organization and gradually transform them into the best possible customer? How do you decide how much to spend on various marketing actions? How do you think about the pricing decision with a view to optimizing the value of your customers as assets? Where do you start, what tools do you use, and what heuristics are useful in making these decisions? This book attempts to answer questions such as these. The one-sentence summary of the answer, though, is simple — hold the individual's hands and walk them up a value ladder, one step at a time.This book is written for an advanced student of business and the practicing manager. It presents an integrated view of the marketing function. In particular, it focuses on all the activities that a firm engages in to create and manage value - not just the customer-facing activities. It links the traditional views of customer value with the finance, accounting, human resources, organizational behaviour, information technology and operations functions of the organization. It draws on the science of behaviour change and the data sciences to present a contemporary view of the customer value function. The content is meant to be prescriptive — it describes a process for value creation and management, yet analytical; theoretical, yet empirically driven. It urges the reader to think about the customer value function to be organized along activities that the firm would like the customers to engage in, not activities that the firm engages in. It presents a framework that is not only conceptually driven but also has a sound mathematical basis.

Download or read book Customer Relationship Management written by V. Kumar and published by Springer. This book was released on 2018-05-15 with total page 422 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book presents an extensive discussion of the strategic and tactical aspects of customer relationship management as we know it today. It helps readers obtain a comprehensive grasp of CRM strategy, concepts and tools and provides all the necessary steps in managing profitable customer relationships. Throughout, the book stresses a clear understanding of economic customer value as the guiding concept for marketing decisions. Exhaustive case studies, mini cases and real-world illustrations under the title “CRM at Work” all ensure that the material is both highly accessible and applicable, and help to address key managerial issues, stimulate thinking, and encourage problem solving. The book is a comprehensive and up-to-date learning companion for advanced undergraduate students, master's degree students, and executives who want a detailed and conceptually sound insight into the field of CRM. The new edition provides an updated perspective on the latest research results and incorporates the impact of the digital transformation on the CRM domain.

Download or read book Predictive Marketing written by Omer Artun and published by John Wiley & Sons. This book was released on 2015-08-06 with total page 217 pages. Available in PDF, EPUB and Kindle. Book excerpt: Make personalized marketing a reality with this practical guide to predictive analytics Predictive Marketing is a predictive analytics primer for organizations large and small, offering practical tips and actionable strategies for implementing more personalized marketing immediately. The marketing paradigm is changing, and this book provides a blueprint for navigating the transition from creative- to data-driven marketing, from one-size-fits-all to one-on-one, and from marketing campaigns to real-time customer experiences. You'll learn how to use machine-learning technologies to improve customer acquisition and customer growth, and how to identify and re-engage at-risk or lapsed customers by implementing an easy, automated approach to predictive analytics. Much more than just theory and testament to the power of personalized marketing, this book focuses on action, helping you understand and actually begin using this revolutionary approach to the customer experience. Predictive analytics can finally make personalized marketing a reality. For the first time, predictive marketing is accessible to all marketers, not just those at large corporations — in fact, many smaller organizations are leapfrogging their larger counterparts with innovative programs. This book shows you how to bring predictive analytics to your organization, with actionable guidance that get you started today. Implement predictive marketing at any size organization Deliver a more personalized marketing experience Automate predictive analytics with machine learning technology Base marketing decisions on concrete data rather than unproven ideas Marketers have long been talking about delivering personalized experiences across channels. All marketers want to deliver happiness, but most still employ a one-size-fits-all approach. Predictive Marketing provides the information and insight you need to lift your organization out of the campaign rut and into the rarefied atmosphere of a truly personalized customer experience.

Download or read book Social Media and Networking Concepts Methodologies Tools and Applications written by Management Association, Information Resources and published by IGI Global. This book was released on 2015-07-31 with total page 2337 pages. Available in PDF, EPUB and Kindle. Book excerpt: In the digital era, users from around the world are constantly connected over a global network, where they have the ability to connect, share, and collaborate like never before. To make the most of this new environment, researchers and software developers must understand users’ needs and expectations. Social Media and Networking: Concepts, Methodologies, Tools, and Applications explores the burgeoning global community made possible by Web 2.0 technologies and a universal, interconnected society. With four volumes of chapters related to digital media, online engagement, and virtual environments, this multi-volume reference is an essential source for software developers, web designers, researchers, students, and IT specialists interested in the growing field of digital media and engagement. This four-volume reference includes various chapters covering topics related to Web 2.0, e-governance, social media activism, internet privacy, digital and virtual communities, e-business, customer relationship management, and more.

Download or read book Customer Equity written by Robert C. Blattberg and published by Harvard Business Press. This book was released on 2001 with total page 228 pages. Available in PDF, EPUB and Kindle. Book excerpt: What's a customer worth? The company that can answer this question precisely is the company with an edge in the customer-based, technology - and information - intensive economy of today. But how can an asset as intangible as customer value be measured? This book provides a solution: a fully developed, highly practical new marketing system for measuring and managing customer value as a financial asset - a system uniquely suited to today's rapidly changing, increasingly digital marketplace. Along with strategic and tactical guidance, Customer Equity provides precise metrics for evaluating a business more effectively and improving performance - the "activity-based management" of a company's marketplace. The authors present a new framework for structuring go-to-market activities that links those activities to useful metrics and allows better-informed marketing decisions.

Download or read book Handbook of Research on Customer Equity in Marketing written by V. Kumar and published by Edward Elgar Publishing. This book was released on 2015-01-30 with total page 521 pages. Available in PDF, EPUB and Kindle. Book excerpt: Customer equity has emerged as the most important metric to manage firm performance. This Handbook covers a broad range of strategic and tactical issues related to defining, measuring, managing, and implementing the customer equity metric for maximizin

Download or read book Managing Good and Bad Customers written by Merlin Stone and published by . This book was released on 1999 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt: