AFP Innova: competing in a tender for new affiliates

2012 ◽  
Vol 2 (7) ◽  
pp. 1-8
Author(s):  
Pablo Farías
Keyword(s):  
Marketing Research ◽  
Subject Area ◽  
Customer Lifetime Value ◽  
Customer Equity ◽  
Financial Data ◽  
Marketing Metrics ◽  
Value Analysis ◽  
Content Type ◽  
Customer Lifetime ◽  
Lifetime Value

Subject area The concepts of customer lifetime value (CLV) and customer equity (CE). Study level/applicability BA, MBA, MSc courses: customer equity, marketing metrics, marketing plan, marketing research. Because students are asked to complete a customer lifetime value analysis based on a range of financial and non-financial data, students will need at least a modest level of proficiency in dealing with a few basic financial accounting concepts. Case overview In Chile, a law passed in 2008 introduced a bidding process to be held every 24 months in the pension industry. The tender mechanism was introduced as part of a reform aimed at reducing the commissions charged by pension fund administrators and at making it easier for new players to enter the market. In early 2009, Daniel Ugarte wondered if it was finally the right time for his firm to enter the pension industry. Ugarte was asked by the board to help chart a direction for the firm. The winning criterion was the lowest management fee (commission) paid by the affiliates. The main focus of the case is a quantitative assignment that asks students to calculate how customer lifetime value (CLV) and customer equity (CE) would be affected by the commission offered. Expected learning outcomes These include: understanding the concepts of customer lifetime value (CLV) and customer equity (CE) and the importance of maximizing a customer's lifetime value for the firm by calculating the CLV and the CE based on a combination of financial and non-financial data. Supplementary materials Teaching notes are available. Consult the librarian for access.

Alianza: pricing to enter the pension industry

2014 ◽  
Vol 4 (4) ◽  
pp. 1-6 ◽  
Author(s):  
Pablo Farías
Keyword(s):  
Marketing Research ◽  
Subject Area ◽  
Pricing Strategy ◽  
Marketing Plan ◽  
Marketing Metrics ◽  
Content Type ◽  
Customer Lifetime ◽  
Lifetime Value ◽  
The Impact

Subject area The focus of the case is on the concepts of customer lifetime value (CLV) and customer equity (CE). Monitoring, measuring and maximizing CLV and CE have become a key priority for all marketers. Instructors can introduce these concepts and its key components. The main focus of the case is a quantitative assignment that asks students to analyze the convenience for the existing five AFPs (Administradora de Fondos de Pensiones, Pension Fund Administrator) of winning the tender. The use of CLV and CE measurements is particularly relevant. Students need to estimate the impact of pricing on the CLV and CE of the existing five AFPs. Study level/applicability BA, MSc, MBA Courses: CE, Marketing Metrics, Pricing. The case can also be used in courses that focus on Marketing Plan, Marketing Research or Services Marketing. Case overview In early 2009, Valentina Vial was given the assignment to develop the pricing strategy of Alianza to enter the pension industry. The company will propose a commission fee to compete with the country's existing five AFPs. Whichever AFP presents the lowest commission will be awarded the tender. When there are several competitors, the company must guess each competitor's likely pricing decision. In the analysis of the convenience for the existing five AFPs of winning the tender, the use of CLV and CE measurements is particularly relevant. Valentina Vial needed to estimate the impact of pricing on the CLV and CE of the existing five AFPs. Expected learning outcomes Understand the concepts of CLV and CE and the importance of maximizing a customer's lifetime value for the firm by calculating the CLV and the CE based on a combination of financial and non-financial data. Illustrate the importance of adopting a long-term strategic perspective (using CLV and CE) in choosing a pricing strategy. Once a firm commits to a pricing strategy, it is difficult to shift course. Given this, the choice of pricing levels should be informed by long-term strategic thinking, including consideration of potential competitive pricing decisions. Supplementary materials Teaching Notes are available for educators only. Please contact your library to gain login details or email [email protected] to request teaching notes.

scholarly journals A marketing view of the customer value: Customer lifetime value and customer equity

2013 ◽  
Vol 44 (4) ◽  
pp. 47-64 ◽  
Author(s):  
A. M. Estrella-Ramón ◽  
M. Sánchez-Pérez ◽  
G. Swinnen ◽  
K. VanHoof
Keyword(s):  
Customer Value ◽  
Customer Lifetime Value ◽  
Customer Equity ◽  
Future Research ◽  
Customer Profitability ◽  
Profitability Analysis ◽  
Customer Lifetime ◽  
Lifetime Value ◽  
Equity Measures

Throughout this research the customer valuation trend in marketing is going to be reviewed, emphasizing Customer Lifetime Value and Customer Equity measures. The main theoretical contributions in the development and evolution of the Customer Lifetime Value concept are analysed. Customer Lifetime Value is also differentiated from Customer Equity and Customer Profitability analysis to estimate customer value in terms of firm profitability. Customer Lifetime Value and Customer Equity concepts are formally defined. Additionally, a classification of a set of published researches into Customer Lifetime Value and/or Customer Equity is developed. This classification has been posited according to several criteria that serves as a guide to key requirements for developing these types of models. Finally,several conclusions, suggestions and future research streams are highlighted.

Delta model application for developing customer lifetime value

2019 ◽  
Vol 37 (3) ◽  
pp. 298-309 ◽  
Author(s):  
Bahman Hajipour ◽  
Molud Esfahani
Keyword(s):  
Customer Lifetime Value ◽  
Clustering Methods ◽  
Content Type ◽  
Customer Lifetime ◽  
Rfm Model ◽  
Lifetime Value ◽  
Two Stages ◽  
Lock In ◽  
The Relationship ◽  
Delta Model

Purpose The purpose of this paper is to evaluate the relationship between strategy and customer lifetime value (CLV). A new model was proposed for defining customers’ values based on the RFM model and segmenting bank customers using the K-means algorithm. In addition, the authors combined a new category with the delta model in order to analyze the behavior of each cluster. Design/methodology/approach This case study was based on an applied method following its objectives and a descriptive-analytic method in terms of data collection. In this research, the AHP, data mining and K-means clustering methods, as well as the discriminant analysis were applied for computing the weights of the indices, examining the relationship between the identified variables, clustering the records and ensuring the clustering accuracy based on the RFM model, respectively. Findings The paper confirmed the relationship between the strategies and CLV. For a cluster whose strategy was the best product, customers had a minimal CLV. For a cluster whose strategy was based on total customer solutions, customers had a median CLV. For a cluster whose strategy was a lock-in system, customers had a maximal CLV. The results suggested that the delta model with these three strategies could act as the CLV developers in two stages: conversion of transient customers to attached customers and conversion of attached customers to locked-in customers. Research limitations/implications One of the limitations of this study was the lack of access to all the bank accounts and assessment of only the strategy type, while highlighting the exact association between every component of the strategies (e.g. structure, environment, etc.) and CLV as a dependent variable deemed to be of a great necessity. Hence, it is recommended that several studies on the relationships presented in this paper be performed to provide further insights into and guidelines on this issue in the future. Practical implications This study emphasized the relevance of strategy and CLV. Managers should differently treat customers in distinct CLV and loyalty levels. In other words, managers must segment their customers based on CLV and apply appropriate strategies for each segment. Originality/value This research tried to fulfill an identified need to study how strategy can be effect CLV through the application of the delta model with three strategic options.

Customer lifetime value: investigating the factors affecting attitudinal and behavioural brand loyalty

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ala' Omar Dandis ◽  
Mohammad Badi' Al Haj Eid
Keyword(s):  
Willingness To Pay ◽  
Brand Loyalty ◽  
Word Of Mouth ◽  
Customer Lifetime Value ◽  
Special Treatment ◽  
Internet Service ◽  
Content Type ◽  
Customer Lifetime ◽  
Treatment Benefits ◽  
Lifetime Value

PurposeThis paper investigates the factors affecting customer lifetime value from an attitudinal and behavioural brand loyalty perspective in the Internet service industry. Specifically, willingness to pay more and word of mouth are categorised under attitudinal loyalty, while repurchase intention is classified under behavioural loyalty.Design/methodology/approachA self-administered questionnaire online survey via Google Forms was employed comprising a sample of 481 participants from the Internet service providers. The partial least squares structural equation modeling (PLS-SEM) approach was applied for hypotheses testing.FindingsThe current study found that “brand credibility, special treatment benefits and confidence benefits had a positive and significant influence on willingness to pay more, word of mouth and repurchase intention, with confidence benefits and brand credibility showing as the greatest elements resulting in word of mouth and repurchase intentions, whereas special treatment benefits showing as the greatest element resulting in the willingness to pay more. The results of this study did not show any positive significant between service quality dimensions and true brand loyalty (word of mouth, willingness to pay more and repurchase intention). Results also found that confidence benefits, brand credibility and special treatment benefits had an indirect impact on true brand loyalty through customer satisfaction”.Practical implicationsInternet service providers should develop and maintain good relationships with their customers as the excellence of the customer–service provider relationship can enhance customer lifetime value.Originality/valueThe current work measured customer lifetime value in terms of both the behavioural and attitudinal aspects to represent loyalty, while most previous studies consider only one dimension for this representation. Particularly, customers' true brand loyalty is measured using separate components of repurchase intentions (RIs), willingness to pay more (WPM) and word of mouth (WOM) to deepen the understanding of both managerial interest and academic.

Estimating customer lifetime value for new product development based on the Kano model with a case study in automobile industry

2015 ◽  
Vol 22 (5) ◽  
pp. 857-873 ◽  
Author(s):  
Arash Shahin ◽  
Somayeh Mohammadi Shahiverdi
Keyword(s):  
Product Development ◽  
New Product Development ◽  
Automobile Industry ◽  
Product Life Cycle ◽  
New Product ◽  
Customer Lifetime Value ◽  
Kano Model ◽  
Content Type ◽  
Customer Lifetime ◽  
Lifetime Value

Purpose – In previous studies, historical information of customer had been used for determining customer lifetime value (CLV). The purpose of this paper is to modify CLV estimation to be applied before producing a new product. Design/methodology/approach – In this study, the CLV estimation has been modified using Kano satisfaction coefficient. The Kano satisfaction coefficient has been assumed as loyalty indicator in estimating CLV and related equations have been developed for allocating Kano requirements to various phases of product life cycle. The proposed approach has been examined in two new product options of the automobile industry. Finally, by using customers’ purchase records during three years, CLV has been calculated for both product development options. Findings – Findings indicate that CLV of the first development option is equal to 407 million and 500,000 toumans and of the second option is equal to 392 million toumans, this difference is related to different requirements of the Kano model, and as a result, to different satisfaction coefficients. Therefore, the first option has been suggested for investing in developing new product. Research limitations/implications – Application of the proposed approach is limited to short time periods. The findings are limited to the automobile industry. Originality/value – The modified approach of estimating CLV can be applied for prospective new product development in addition to traditional approaches in which, only the historical data of sold products are used. In addition, using Kano satisfaction coefficient in estimation of CLV in short periods, seems an appropriate approach for competitive industries that focus on dynamic needs of customers.

Knowledge acquisition of association rules from the customer-lifetime-value perspective

Kybernetes ◽  
2018 ◽  
Vol 47 (3) ◽  
pp. 441-457 ◽  
Author(s):  
Cheng-Hsiung Weng ◽  
Tony Cheng-Kui Huang
Keyword(s):  
Association Rules ◽  
Association Rule ◽  
Frequent Itemsets ◽  
Customer Lifetime Value ◽  
Rule Mining ◽  
Content Type ◽  
Customer Lifetime ◽  
Lifetime Value ◽  
Optimum Approach ◽  
Customer Values

Purpose Customer lifetime value (CLV) scoring is highly effective when applied to marketing databases. Some researchers have extended the traditional association rule problem by associating a weight with each item in a transaction. However, studies of association rule mining have considered the relative benefits or significance of “items” rather than “transactions” belonging to different customers. Because not all customers are financially attractive to firms, it is crucial that their profitability be determined and that transactions be weighted according to CLV. This study aims to discover association rules from the CLV perspective. Design/methodology/approach This study extended the traditional association rule problem by allowing the association of CLV weight with a transaction to reflect the interest and intensity of customer values. Furthermore, the authors proposed a new algorithm, frequent itemsets of CLV weight (FICLV), to discover frequent itemsets from CLV-weighted transactions. Findings Experimental results from the survey data indicate that the proposed FICLV algorithm can discover valuable frequent itemsets. Moreover, the frequent itemsets identified using the FICLV algorithm outperform those discovered through conventional approaches for predicting customer purchasing itemsets in the coming period. Originality/value This study is the first to introduce the optimum approach for discovering frequent itemsets from transactions through considering CLV.

scholarly journals Predictive Performance of Customer Lifetime Value Models in E-Commerce and the Use of Non-Financial Data

2019 ◽  
Vol 28 (6) ◽  
pp. 648-669 ◽  
Author(s):  
Pavel Jasek ◽  
Lenka Vrana ◽  
Lucie Sperkova ◽  
Zdenek Smutny ◽  
Marek Kobulsky
Keyword(s):  
Predictive Performance ◽  
Customer Lifetime Value ◽  
Financial Data ◽  
Customer Lifetime ◽  
Lifetime Value

Retail Relay (A)

2010 ◽  
pp. 1-14
Author(s):  
Ronald T. Wilcox ◽  
Kelly Brandow
Keyword(s):  
Business Model ◽  
Customer Lifetime Value ◽  
Previous Experience ◽  
Grocery Shopping ◽  
Value Analysis ◽  
Customer Lifetime ◽  
Small Market ◽  
Lifetime Value ◽  
New Business ◽  
Organic Meat

Specializing in local, organic meat and produce, Retail Relay developed a new business model for online grocery shopping and delivery. Having succeeded in the small market of Charlottesville, Virginia, it was considering expanding to other, larger markets. This case focuses on customer lifetime value analysis and how this analysis, when paired with previous experience with consumer promotions, can guide thinking in developing the best strategies and tactics for entering new markets.

The added value of service provision

2014 ◽  
Vol 32 (6) ◽  
pp. 457-476 ◽  
Author(s):  
Henrich Nyman
Keyword(s):  
Service Provider ◽  
Service Provision ◽  
Service Providers ◽  
Development Program ◽  
Customer Lifetime Value ◽  
Added Value ◽  
Service Development ◽  
Content Type ◽  
Customer Lifetime ◽  
Lifetime Value

Purpose – The purpose of this paper is to present a framework for examining the outcome of value facilitation as the added value of service provision. Design/methodology/approach – Value facilitation is conceptualized as enabling, enhancing, and economical support by the service offering, as well as supportiveness by the service provider. The financial value of customers is measured by the augmented customer lifetime value (ACLV). Findings – Referrals is found to mediate the linkage between value facilitation and ACLV. The margin multiple level and corresponding propensity to stay scores are found to be better proxies for setting up a customer oriented service development program, than the customer profit or margin level. Research limitations/implications – This paper takes a service provider perspective on service, even though the customer experience of the service provision is vital. Practical implications – The proposed framework can be used for designing adapted customer strategies for different groups of customers representing different levels of added value of the service provision. Originality/value – This paper extends the normative service logic notion of the role of service providers as value facilitators and supporters of their customers’ value creation activities. The calculation of ACLV is altered from ordinary customer lifetime value models by the integration of individual transaction data and propensity to stay figures from a customer survey.

Sign in / Sign up

Export Citation Format

Share Document