MANAGING in the

NEW WORLD

A study by professors from the Wharton Business School have developed a new concept called Customer Lifetime Value (CLV) which This theory states that new customer acquisition is complicated, depends on several factors and is expensive. However, retaining customers can bring tremendous value. Instead of trying to retain them simply by providing good service and benefits, CLV looks at predicting their future requirements so that relevant products may be offered to them. Data is collected on past trends to be subsequently analyzed. This provides the retailers with substantive business intelligence to build predictive analytics models on. A lot of marketers have been found to be guilty of falling in to the trap of stereotyping their customers instead of assigning quantifiable values. Zodiac has developed such an algorithm to help predict customer moves in the future. A software platform was developed for this to study customer transactions of the past. For this to succeed, goal alignment with the finance team is necessary. Different industries such as retail, entertainment, travel and pharmacy can tap in to this tool as requirements are similar.

Source:http://knowledge.wharton.upenn.edu/article/160811b_kwradio_fader-mariychin-mp3-zodiac/

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