Differentiation of Customers

Differentiation of Customers

Introduction

This paper is focused on knowing the most valuable customers of the advertising firm. It will examine the various segments of customer base that have the most growth potential and the segments that are making the least contribution to the profitability of an advertising firm. The groups of customers that are analyzed are Most Valuable Consumers (MVCs), Most Growable Customers (MGCs), Below Zeros (BZs) and Migrators. The paper includes the differentiation of customers based on value. The differentiation by value focuses on definition, quantifying and ranking the value of each individual customer type.

Discussion

The differentiation of customers by value includes following customers

Most Valuable Customers (MVCs)

Most valuable consumers are those consumers that are the most profitable for a company. These customers buy more or higher value products than the average consumers. Most valuable consumers are the ones, who do the most business, yield the highest margins and are most willing to collaborate and tend to the most loyal. Companies can provide these customers with advice and assistance to make them loyal.

Most Valuable Customers (MVCs)

Index

Measures

Weights

Revenue

The revenue of most valuable customers will be measured by the difference in the costs and benefits of the company.

The weight of revenue for most valuable customers will be higher than any other type of customers, because such customers are most profitable for the company and thus have higher weights in terms of revenue. The assigned weight is “highest revenue”.

Purchase Frequency

As an Account Executive of an advertising firm, the purchase frequency can be measured by tracking how frequently the repeat customer places order will serve as basis for building of some interesting customer insights. I will analyze and measure the purchase frequency by identification of the frequent sales activities of repeat customers.

The tracking of purchase frequency of most valuable customers is very important in identification and finding of customer insights. The element is weighted as important if the purchase frequency of valuable customers would be higher, they would be more profitable for the company. The weight assigned is “highest purchase frequency”

Average Order Value

In order to measure the average order value, I will analyze how much does a customer spend on average and how does that stack up in comparison with other customers.

The element of average order value is also important because it measures the average spending of most valuable customers and their comparison with other customers. The assigned weight is “highest average order value”

Lifetime Value

I will measure the most valuable customer's life time value for an advertising firm by tracking how much customers have spent over their course of relationship with our company. This will give me the best ways for identification of my most high value customers.

The customer lifetime value has great importance in terms of performing accurate comparisons. The assigned weight for index is “highest lifetime value”

Price Sensitivity

The sensitivity of price relative to most valuable customers will be measured or determined by finding of customers that have increased their purchasing when sales or discounts were offered. This measurement of price sensitivity will help me ...