CLV formula for Heineken.
While focusing on the clientele base for Heineken, it is essential to observe consumer behavior as it relates to the customer lifetime value. This approach would help identify the consumer value with regards to total revenues generated. These estimations would also be initiated by factoring in the varying consumption behaviors. Consumer behaviors are also used to identify the supply-demand curves in the different segments of the market. By studying the market, the organization has detected gender-related concepts that can be applied to widen the market. The studies have identified some drinking behaviors are gender-oriented. This is to say women consume beers on lesser occasions than men (Nickell, 2010).
To develop a suitable formula for Heineken, one needs to understand several factors relating to the market. Cost of acquisition is one of the key perceptions the company may have to consider. Cost of acquisition represents the amount that the institute invests in acquiring a single client. This aspect engages the strategic costs that the organization may engage while targeting a given population. For instance, studies have identified some drinking traits mainly associated with the millennial generation of consumers. One of these traits involves the need to glide over varying brands as part of their drinking behavior (Malthouse, 2016).
Heineken can acquire a brand-oriented marketing strategy to acquire 3000 members of the millennial age group(born between 1983 and 1997) in the market. This strategy may cost the company $5,000 000 dollars a year. To find the acquisition cost for each customer, the amount used in initiating the strategy is divided by the number of consumers acquired. In this case, $5,000,000 is divided by 3000 consumers. Therefore, the acquisition cost through this strategy amounts to $1666.67 per client. It may cost the company $500 to serve a single client every year, amounting to 5,000 over 10 years.
This value is added to the acquisition cost to get the total amount that an organization has invested in the client (6,666.67).
Client total revenue in 10 years = 15,000-acquisitions and service cost.
CLV= 8,333.33
There are different methods that the organization can use to initiate the market customer equity concept. Developing a review oriented operation is an approach that can be used to engage with the consumer ideas and preferences. Engaging consumers with the production and supply procedures would identify the individual traits associated with some drinking cultures (Nickell, 2010).
References
Malthouse, E. C. (2016). Customer relationship management strategy: More important now than ever before. In The New Advertising: Branding, Content, and Consumer Relationships in the Data-Driven Social Media Era (pp. 111-134). Westport, Connecticut: Praeger.
Nickell, D. (2010). The Drivers of a Successful Corporate Sponsorship and the Quantified Financial Impact: Applying the Attitudinal Triad of Cognition, Affect, and Conation and Customer Lifetime Value to Corporate Sponsorships.
