{"id":210,"date":"2021-11-13T13:21:17","date_gmt":"2021-11-13T10:21:17","guid":{"rendered":"https:\/\/quecst.qcri.org\/blog\/?p=210"},"modified":"2021-11-14T16:14:10","modified_gmt":"2021-11-14T13:14:10","slug":"customer-segmentation-and-strategy-development-based-on-customer-lifetime-value-a-case-study-summary","status":"publish","type":"post","link":"https:\/\/acua.qcri.org\/blog\/customer-segmentation-and-strategy-development-based-on-customer-lifetime-value-a-case-study-summary\/","title":{"rendered":"Customer Segmentation and Strategy Development Based on Customer Lifetime Value: A Case Study \u2014 Summary"},"content":{"rendered":"

In this article we will be reviewing a research paper titled: Customer segmentation and strategy development based on customer lifetime value<\/strong>; published by Elsevier in the year 2006. The authors have presented an approach for evaluating customer value and segmenting customers into segments on the basis of their value.<\/span><\/p>\n

Following the segmentation of consumers on the basis of their value, a case study on a wireless telecommunication company is used to demonstrate how to construct approaches based on customer segment.<\/span><\/p>\n

The research paper was written by Su-Yeon Kim, Tae-Soo Jung, Eui-Ho Suh, and Hyun-Seok Hwang with Hwang being the corresponding author. They belonged to Daegu University, Samsung Economic Research Institute (Department of Management Strategy), POSTECH (Department of Industrial Engineering), and the Department of Business Administration in Hallym University, South Korea, respectively at the time of conducting this research.<\/span><\/p>\n

The Methods Employed<\/b><\/h3>\n

The goal of this study was to provide a new LifeTime Value<\/strong> (LTV) model and customer segmentation approach that takes customer defection and cross-selling opportunities into account. Following the division of the customer base, the authors also recommended several marketing techniques.<\/span><\/p>\n

Customer Lifetime Value<\/strong> (CLV) is a marketing measure that estimates a customer’s worth over the course of their engagement with a firm. It is the current market worth of a single buyer’s expected future revenues. It is also known as lifetime customer value or simply lifetime value, and it is shortened as CLV, LCV, or LTV.<\/span><\/p>\n

CLV-based optimization aims to increase profitability by monitoring customer behavior and economic cycles to determine and target consumers with the highest potential net value over the years (Ramachandran, 2006).\u00a0<\/span>A valuable client is one that generates an income stream that surpasses the budget of acquiring, marketing, and maintaining that customer throughout time by an appropriate margin.<\/span><\/p>\n

Customer satisfaction is the most common statistic used by businesses to identify and manage the possibility of consumers defecting. Although contentment and defection are linked, satisfaction is not a sufficient determinant of consumer defection (Capraro et al., 2003).<\/span><\/p>\n

Cross-selling has been highlighted as a successful relationship marketing technique with the goal of retaining customers. High-frequency cross-sellers report receiving much more cross-selling benefits from their businesses, and a higher dedication to cross-selling within their working group.\u00a0<\/span><\/p>\n

Additionally, a deeper understanding and self-efficacy in respective cross-selling roles is achieved. The findings have ramifications for sales staff who are involved in cross-selling strategies (Jim Zboja, 2012).<\/span><\/p>\n

The following is a breakdown of the research paper’s structure.<\/span><\/p>\n