Customer Value and Customer Lifecycle

The expectation of income (or profits) that a company can expect from the development of a medium and long-term relationship with a customer.

Definition

The Customer Value measurement expectancy income (or profit) that an enterprise can expect the development of a medium and long-term relationship with a client.

Approach

The Soft Computing approach of the Customer Value is based on the decomposition of the Customer Value into 3 elements:

• Current Value Estimation with an analysis of revenues and margins by product families in relation to support costs around this activity. This approach makes it possible to identify the sources of profitability of the client
• Competitive Value Estimate with an assessment of customer satisfaction and sources of differentiation and improvement in the development of the relationship. This approach makes it possible to identify priority improvement levers to improve customer satisfaction and loyalty.
• Estimation of the Future Value with an evaluation:
  > of the current food rate of the customer (ratio between his consumption of a need in the company / total consumption of this need),
  > the potential of the evolution of the customer according to his development cycle or its behavioral profile

The Future Value provides opportunities for improving value in the short to medium term.

The 3 values ​​combine to determine the Customer Value :

• Current Valuepositive or negative (how to improve it),
• Positive or negative competitive value(how to improve my competitive position),
• Positive or negative Future Value(is it possible to expect a short or medium term improvement in the current value)?

Customer Value = V. Current x V. Competitive x V. Potential

The Customer Value has the consistency of its weakest element!

The originality of the Soft Computing approach lies in the combination of segmentation, data mining, external investigation and enrichment techniques to evaluate the different elements of Value.

Results

Determining Customer Value translates into tangible and measurable results:

• Better identification ofpotential targets for recruitment or first purchase acts to better target recruitment actions,
• Better allocation of marketing investments(visits, mailings, contacts) on targets with potential for portfolio development,
• Optimization of the commercial portfolios with an adaptation of the “customer profiles” according to the profiles of the sales representatives (action of targeted training).

Originally published at Entrepreneur News and Startup Guide.