Marketing for ABC Company

Question # 1

In field of marketing customer lifetime value can defined as a forecast of the net profit which can be gained from the relationship with the customer. This forecasting model may include the technicalities and levels of accuracies. It may include the complex forecasted analytical techniques.

Customer lifetime value can be defined as the dollar value of relationship with the customer it calculates the present value of the forecasted future cash flows. It is an important concept which encourages the organization from the near or short term profits to the long term view of the profits. It represents the upper limit of one spreading to acquire new and long term customers. Customer lifetime value can be calculated by the following formula:

Here; where GC is yearly gross contribution per customer, M is the retention costs per customer annually and n is the horizon in number of years, r is the yearly retention rate, and d is the yearly discount rate.

The meaning for this calculation is that management will be able figure out the real value of the existing customers. It answers the question that how much these customers are important for the company in a long run. If these customers move some other rent a car dealer this will definitely affect this company in a negative manner. The greater the CLV value the more the company will lose on losing these customers. Customer lifetime value gives the sign that how the existing customers will grow and what amount of Money, Company can earn from these customers with given amount of time in years.

As far as the relationship between the customer satisfaction and the customer lifetime value we have lots of examples to understand.

Customer service can be of two types, depending upon the satisfaction level of customers. If the expectations of customers are met, they feel satisfied with the service. This classifies the service as an outstanding customer service. To meet the demands of customers is very important in order to provide excellent customer service. An organization can only get a success if it fulfills all the expectations of its customers (Hatch,103). If the company delights its customer, that is, it goes beyond their expectations, and then organization will succeed in terms of customer service (Hatch, pp.92-105). Few organizations cannot meet the expectations of its customers, and hence it gives poor customer service. Customers are very important for every organization. On top of that, the satisfaction of these customers is more important. Some companies fail to do this. The common mistake or misconception that these companies has is that they think they are giving the best, but in reality, they are only doing what is convenient for them (Goodman, pp.16).

Satisfaction

One of the key objectives of customer service is the satisfaction of customers. The smooth transition of the customer related processes improves the interaction between the organization and the customers making customers satisfied and delighted.

Another major objective of customer service is the retention of ...