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Customer Lifetime Value
In marketing, customer lifetime value (CLV or often CLTV), lifetime customer value (LCV), or life-time value (LTV) is a prognostication of the net profit contributed to the whole future relationship with a customer. The prediction model can have varying levels of sophistication and accuracy, ranging from a crude heuristic to the use of complex predictive analytics techniques. Customer lifetime value can also be defined as the monetary value of a customer relationship, based on the present value of the projected future cash flows from the customer relationship. Customer lifetime value is an important concept in that it encourages firms to shift their focus from quarterly profits to the long-term health of their customer relationships. Customer lifetime value is an important metric because it represents an upper limit on spending to acquire new customers.Farris, Paul W.; Neil T. Bendle; Phillip E. Pfeifer; David J. Reibstein (2010). ''Marketing Metrics: The Definitive Guide ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Marketing
Marketing is the act of acquiring, satisfying and retaining customers. It is one of the primary components of Business administration, business management and commerce. Marketing is usually conducted by the seller, typically a retailer or manufacturer. Products can be marketed to other businesses (B2B Marketing, B2B) or directly to consumers (B2C). Sometimes tasks are contracted to dedicated marketing firms, like a Media agency, media, market research, or advertising agency. Sometimes, a trade association or government agency (such as the Agricultural Marketing Service) advertises on behalf of an entire industry or locality, often a specific type of food (e.g. Got Milk?), food from a specific area, or a city or region as a tourism destination. Market orientations are philosophies concerning the factors that should go into market planning. The marketing mix, which outlines the specifics of the product and how it will be sold, including the channels that will be used to adverti ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Interest Rate
An interest rate is the amount of interest due per period, as a proportion of the amount lent, deposited, or borrowed (called the principal sum). The total interest on an amount lent or borrowed depends on the principal sum, the interest rate, the compounding frequency, and the length of time over which it is lent, deposited, or borrowed. The annual interest rate is the rate over a period of one year. Other interest rates apply over different periods, such as a month or a day, but they are usually annualized. The interest rate has been characterized as "an index of the preference . . . for a dollar of present ncomeover a dollar of future income". The borrower wants, or needs, to have money sooner, and is willing to pay a fee—the interest rate—for that privilege. Influencing factors Interest rates vary according to: * the government's directives to the central bank to accomplish the government's goals * the currency of the principal sum lent or borrowed * the term to m ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Customer Value Maximization
Customer value maximization (CVM) is a real-time service model that, proponents say, goes beyond basic customer relationship management Customer relationship management (CRM) is a strategic process that organizations use to manage, analyze, and improve their interactions with customers. By leveraging data-driven insights, CRM helps businesses optimize communication, enhance cus ... (CRM) capabilities, identifying and capturing maximum potential from prospective and existing customers. Customer-centricity The CVM framework evaluates current methods and effectiveness, makes changes where required, and sets up a measurement system that helps in evaluating effectiveness. The CVM framework operates as a continuous process in a closed loop. The CVM framework is closely related to the idea of customer-lifetime-value. One of the strategies to maximize the value that each customer generates is to split customers into defined segments, a process called client segmentation. Mark ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Customer Profitability
Customer profitability (CP) is the profit the firm makes from serving a customer or customer group over a specified period of time, specifically the difference between the revenues earned from and the costs associated with the customer relationship in a specified period. According to Philip Kotler, "a profitable customer is a person, household or a company that overtime, yields a revenue stream that exceeds by an acceptable amount the company's cost stream of attracting, selling and servicing the customer." Calculating customer profit is an important step in understanding which customer relationships are better than others. Often, the firm will find that some customer relationships are unprofitable. The firm may be better off (more profitable) without these customers. At the other end, the firm will identify its most profitable customers and be in a position to take steps to ensure the continuation of these most profitable relationships. However, abandoning customers is a sensitive p ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Buy Till You Die
The Buy Till You Die (BTYD) class of statistical models are designed to capture the behavioral characteristics of non-contractual customers, or when the company is not able to directly observe when a customer stops being a customer of a brand. The goal is typically to model and forecast customer lifetime value. BTYD models all jointly model two processes: (1) a repeat purchase process, that explains how frequently customers make purchases while they are still "alive"; and (2) a dropout process, which models how likely a customer is to churn in any given time period. Common versions of the BTYD model include: * The Pareto/NBD model, which models the dropout process as a Pareto Type II distribution and the purchase frequency process as a negative binomial distribution * The Beta-Geometric/NBD model, which models the dropout process, as a geometric distribution with a beta mixing distribution, and models the purchase frequency process as a negative binomial distribution. The ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Demographics
Demography () is the statistical study of human populations: their size, composition (e.g., ethnic group, age), and how they change through the interplay of fertility (births), mortality (deaths), and migration. Demographic analysis examines and measures the dimensions and dynamics of populations; it can cover whole societies or groups defined by criteria such as education, nationality, religion, and ethnicity. Educational institutions usually treat demography as a field of sociology, though there are a number of independent demography departments. These methods have primarily been developed to study human populations, but are extended to a variety of areas where researchers want to know how populations of social actors can change across time through processes of birth, death, and migration. In the context of human biological populations, demographic analysis uses administrative records to develop an independent estimate of the population. Demographic analysis est ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Gross Margin
Gross margin, or gross profit margin, is the difference between revenue and cost of goods sold (COGS), divided by revenue. Gross margin is expressed as a percentage. Generally, it is calculated as the selling price of an item, less the cost of goods sold (e.g., production or acquisition costs, not including indirect fixed costs like office expenses, rent, or administrative costs), then divided by the same selling price. "Gross margin" is often used interchangeably with "gross profit", however, the terms are different: "gross ''profit''" is technically an absolute monetary amount, and "gross ''margin''" is technically a percentage or ratio. Gross margin is a kind of profit margin, specifically a form of profit divided by net revenue, e.g., gross (profit) margin, operating (profit) margin, net (profit) margin, etc. Purpose The purpose of calculating margins is "to determine the value of incremental sales, and to guide pricing and promotion decision."Farris, Paul W.; Neil T. Be ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Revenue
In accounting, revenue is the total amount of income generated by the sale of product (business), goods and services related to the primary operations of a business. Commercial revenue may also be referred to as sales or as turnover. Some company, companies receive revenue from interest, royalties, or other fees. This definition is based on International Accounting Standard, IAS 18. "Revenue" may refer to income in general, or it may refer to the amount, in a monetary unit, earned during a period of time, as in "Last year, company X had revenue of $42 million". Profit (accounting), Profits or net income generally imply total revenue minus total expenses in a given period. In accountancy, accounting, revenue is a subsection of the equity section of the balance statement, since it increases equity. It is often referred to as the "top line" due to its position at the very top of the income statement. This is to be contrasted with the "bottom line" which denotes net income (gross reve ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Annual Effective Discount Rate
The annual effective discount rate expresses the amount of interest paid or earned as a ''percentage'' of the balance at the ''end'' of the annual period. It is related to but slightly smaller than the effective rate of interest, which expresses the amount of interest as a ''percentage'' of the balance at the ''start'' of the period. The discount rate is commonly used for U.S. Treasury bills and similar financial instruments. For example, consider a government bond that sells for $95 ('balance' in the bond at the start of period) and pays $100 ('balance' in the bond at the end of period) in a year's time. The discount rate is : \frac = 5.00\% The effective interest rate is calculated using 95 as the base : \frac = 5.26\% which says that 95\% of $105.26 is $100. For every effective interest rate i, there is a corresponding effective discount rate d that can produce the same future value as i if a given amount of principal is invested for the same amount of time at each of ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Net Present Value
The net present value (NPV) or net present worth (NPW) is a way of measuring the value of an asset that has cashflow by adding up the present value of all the future cash flows that asset will generate. The present value of a cash flow depends on the interval of time between now and the cash flow because of the Time value of money (which includes the annual effective discount rate). It provides a method for evaluating and comparing capital projects or financial products with cash flows spread over time, as in loans, investments, payouts from insurance contracts plus many other applications. Time value of money dictates that time affects the value of cash flows. For example, a lender may offer 99 cents for the promise of receiving $1.00 a month from now, but the promise to receive that same dollar 20 years in the future would be worth much less today to that same person (lender), even if the payback in both cases was equally certain. This decrease in the current value of future c ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Churn Rate
Churn rate (also known as attrition rate, turnover, customer turnover, or customer defection) is a measure of the proportion of individuals or items moving out of a group over a specific period. It is one of two primary factors that determine the steady-state level of customers a business will support. Churn is widely applied in business for contractual customer bases. Examples include a subscriber-based service model as used by mobile telephone networks and pay TV operators. Churn rate can also be the input into customer lifetime value modeling and used to measure return on marketing investment with marketing mix modeling. The term comes from the image of agitation of cream in a butter churn. Calculation Churn rate is calculated by dividing the total number of individuals, customers, or items lost during a period divided by total number of individuals during the same period. \text=\frac*100 = \frac * 100 For example, if your company lost 50 customers in month, while having ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Customer Equity
In sales, commerce, and economics, a customer (sometimes known as a client, buyer, or purchaser) is the recipient of a good, service, product, or an idea, obtained from a seller, vendor, or supplier via a financial transaction or an exchange for money or some other valuable consideration. Etymology and terminology Early societies relied on a gift economy based on favours. Later, as commerce developed, less permanent human relations were formed, depending more on transitory needs rather than enduring social desires. Customers are generally said to be the purchasers of goods and services, while clients are those who receive personalized advice and solutions. Although such distinctions have no contemporary semantic weight, agencies such as law firms, film studios, and health care providers tend to prefer '' client'', while grocery stores, banks, and restaurants tend to prefer ''customer'' instead. Client The term client is derived from Latin ''clients'' or ''care'' ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
