From

Product based Matrix

to

Customer based Matrix

 Lifetime Value of a Customer

Lifetime value of a customer is influenced

by the length of an average lifetime,
the average revenues generated per relevant
time period over the lifetime,
sales of additional products and services
over time and referrals generated
by the customer over time.
 Lifetime Value of a Customer
Lifetime value of a customer is influenced by the length of an average lifetime,
The average revenues generated per relevant time period over the lifetime,
sales of additional products and services over time and referrals generated
by the customer over time.

• Sale per unit or customer / Average sale or average ticket size

• Longevity of the relationship

• Number of loyal units or customers.

• Profit through the brand extension

• Referrals – Happy customer will create some customers

 Lifetime Value of a Customer
 Average of the customer Lifetime value (Sales)
 Average of an individual customer Lifetime profitability
Helps in

To quantify the value of losing a customer

To quantify the account size of the employee

To show the accountability to the employee -

To access the importance by the company

To give priorities at the respective stages / duration

To launch the other or similar brand extensions

To recruit staff based on the liability

 Lifetime Value of a Customer

Industry Life time Longevity (years) Sale per Unit

Hotel 5 – 10 Rs 1000 per day

Retail 12 – 15 Rs 4000 per annum

Bank 12 - 15 Rs 2500 per annum

Insurance 15 – 20 Rs 3000 per annum

CA 15 – 20 Rs 2500 per annum

Family Doctor 15 – 20 Rs 2500 per annum

Laundry 5-7 Rs 400 per month

Airlines 3-5 Rs 3000 per trip

 VALUE OF A CUSTOMER
 

For a Shopkeeper :
 Purchase per month of a Family Rs. 2,200/-
15 % GP Rs. 330/-

 
Gross Profit @15% per year Rs. 3,960/-
Profit earned in 15 years Rs.60,000/-
 WHY CUSTOMERS LEAVE A SHOP
v       1% die.
v       3% leave the catchment area
v       5% establish new relation
v       9% offers and schemes in other shops (cherry picker)
v       14% not satisfied with goods and services
68% not satisfied with the behavior of the owner/ staff
v      

CUSTOMER IS THE BIGGEST ASSET

YOU HAVE TO RETAIN HER FOR
YOUR OWN SURVIVAL & GROWTH.
 
VALUE OF A CUSTOMER
Federal Express
(20 person Office had approx $1500 /month)
1$1500/month X 12 months X 10 yrs = $180,000

(2 New customers are referred by the happy customer)

$ 180,000 X 2 new customers = $360,000

Delivery person stops at 40 businesses every day

$ 360,000 X 40 businesses / day = $ 14,000,000 

Average employee manages $ 14,000,000

Average increase in revenue of 20% on the base product would
result in a 33% annual increase in operating profit over 5 years
KNOW YOUR CUSTOMER BETTER
Maintain Name
Address

Phone data

Use caller Id phone ( Local line v/s Mobile)

Greet by Name
Maintain Shopping List of Customers

Remember Special brand preferences

 
Segmentation
and
Targeting
in services
Steps in Market segmentation and targeting
in services
 Marketing Segmentation
Requirement for effective Segmentation

Measurability
The degree to which the size and purchasing power of the
segment can be measured

Accessibility
The degree to which the segments can be reached & served

Substantiality
The degree to which segments are large or profitable enough

Actionablity
The degree to which effective programs can be designed for
attracting and serving of the segments
Pattern of market Segmentation in Services
Price versus Service Quality
P
R
I
Homogenous preferences
C All the customers have roughly same preferences
E

SERVICE QUALITY

Diffused preferences
P
R Extreme preferences should have some what in
I
C Between or in centre, hoping to appeal all
E

SERVICE QUALITY

Clustered preferences (3 options)

P 1. Position in between or in centre (Natural Market)
R
I
2. Position in Largest group ( Concentrate Marketing)
C
E
3. Develop several brand each positioned in different
segment.
SERVICE QUALITY
 Individualized Services
Segment of One
Service being Heterogeneous can be customized hence
“Segment of One” or “Mass customization”

Customizing the service around a standardized core

Creating customizable services

Offering point of delivery customization

Offering standard modules that can be combined in unique ways

1 A Chain of Hong Chowe Restaurant serving cockroaches,
worms and lizards other similar delicacies

WOW !!
what a taste
ADD Options : Other (Specify); Not applicable; All; None
ADD Options : Other (Specify); Not applicable; All; None
2 Seminar & Special lecture on How to enter in Politics?
with special emphasis on How to earn money in Politics?
ADD Options : Other (Specify); Not applicable; All; None
ADD Options : Other (Specify); Not applicable; All; None
3 Chain of Kids Video knowledge Parlor –
Only educational films
ADD Options : Other (Specify); Not applicable; All; None
ADD Options : Other (Specify); Not applicable; All; None
4 Chain of Beauty Parlor – Basic ingredient,
Brain of monkey, for skin uplifting
ADD Options : Other (Specify); Not applicable; All; None
ADD Options : Other (Specify); Not applicable; All; None
5 Trekking expedition in Himalaya ranges for 45
plus adults
ADD Options : Other (Specify); Not applicable; All; None
ADD Options : Other (Specify); Not applicable; All; None
6 Chain of Coaching Classes of grooming for
Beauty Contest
ADD Options : Other (Specify); Not applicable; All; None
ADD Options : Other (Specify); Not applicable; All; None
7 Chain of Dance bars – serving liquor, drugs
and non-veg. delicacies
ADD Options : Other (Specify); Not applicable; All; None
ADD Options : Other (Specify); Not applicable; All; None
 Level of Retention Strategy
Leonard Berry and A Purshuraman

Suggested the different Levels of strategies results in close ties that binds
the customer with the service provider

Level 4 Structural bonds Level 1 Financial bonds

Retention
Strategy

Level 3 Customization bonds Level 2 Social bonds

Level of Retention Strategy