This material provides a short online tutorial on customer lifetime value. It is a portion of the website for Jim Novo's book, "Drilling Down: Turning Customer Data into Profits with a Spreadsheet." The Drilling Down Project is a collection of short articles, links to books and websites, and online metrics focusing on interactive customer relationships and loyalty techniques. The promotional website contains information regarding online ROI, customer lifecycles, customer retention, and the role of recency and latency online. Upper-level marketing and business students can increase their knowledge on topics related to online customer relationships and the ability to quantify these online encounters.
The major learning goals are to: (1) illustrate the concept of calculating customer lifetime value, (2) differentiate between calculating absolute and relative customer lifetime value, (3) identify issues in calculating customer lifetime value, (4) acquire a deeper appreciation for the complexities of online CRM, the importance of recording and using web activity, how web activity can translate into quantifiable profits/outcomes and the role of time in the creation of customer profiles.
Target Student Population:
The target population includes students enrolled in a direct marketing or advanced marketing course as well as anyone interested in the concept of calculating customer lifetime value.
Prerequisite Knowledge or Skills:
The student should have an understanding of the concept of customer lifetime value and why it is used to enhance the effectiveness of this material. Students without this knowledge could obtain it via other links on the site. It would also be helpful for students to have basic knowledge of principles of marketing.
Type of Material:
The Drilling Down Project is a collection of information related to online CRM techniques, theories, and applications. It is an online resource/tutorial within a portion of a larger online resource on maximixing customer ROI.
This site would best be used in a setting where an instructor wants to briefly discuss issues in calculating customer lifetime value in a very broad framework. It would not be good to use in a setting where an instructor wants to thoroughly explain/discuss/demonstrate customer lifetime value.
The site could be used to supplement lectures within an Internet/Database marketing class or a lecture dealing with CRM. More specifically, the link on "favorite drilling down" websites (left hand navigation bar), Excel calculator (calculates how web activity/sales translates into ROI), and the discussion of lifetime value are worthwhile. An instructor may direct a student to read some of these articles to be later integrated into a class discussion or a class activity could revolve around using the online excel calculator or tutorials.
Technical requirements include internet browser access, Adobe Acrobat or Word to view the book chapters, and Excel to use the "web activity to profit" calculator.
Evaluation and Observation
The strength is not in this individual module but in the complete package. This module is only a small portion of a much broader discussion on how to use customer data to help marketers enhance their profit potential.
The author does a good job of providing linkages among the various modules created. This specific module does explain some important issues of concerns for marketers when calculating customer lifetime value. As examples, the module:
-lists archived articles (see "fresh marketing articles link-left hand) -links to CRM websites (found under the "Favorite Drilling Down Websites" link) -calculates ROI relating to the online environment. -provides a Consumer Metric Calculator -addresses the importance of time when understanding customer relationships
The module cannot truly be used in isolation. Without accessing the other modules incorporated on the web site, there is not enough depth of information provided to give the user a clear understanding of customer lifetime value. It should also be noted that what is provided on the web site is only a snippet of a more detailed book.
While the information provided on the site provides an overview, its intent is to entice the user to acquire the book. Much of the information appears to be "teasers" (i.e. buy my book for $129 to find out more). Furthermore, the downloaded book chapters are primarily promises of what the book will if purchased rather than actionable information.
1. Many specific theories/models/online calculator appeared to be developed by the author and their credibility rests primarily on the author's claims.
2. Statistics are not followed up by references and some information is vague.
Potential Effectiveness as a Teaching Tool
The material provided here can be used as a jumping off point to teach how to calculate customer lifetime value as well as generate discussion about related issues. The website discusses some CRM considerations that may not be stressed in some academic textbooks.
This module needs to be attached with other materials to be effective. It cannot stand alone as a teaching tool. The entire site provides a better overview but is still, at best, only summary material which covers the concepts from only the broadest perspectives.
The website's organization and presentation of the material may frustrate some students. Some material is vague and is offered soley to promote the book or highlight the book's importance. The constant promotion of the book is likely to be annoying/distracting to the student.
Ease of Use for Both Students and Faculty
The site is effectively designed and the author has provided linkages throughout the modules so the user can easily click around to get information on the various topic areas covered. There are also some links to free tools and additional resources that may be helpful to the user.
The site was created as a teaser to entice the user to purchase the author's book.
The actual content of the site is offered in a small text box. The bulk of the website is monopolized by the website's framework.
The ample use and referencing of links within the articles and overuse of links at the top, right and left hand sides of the web page is frustrating. Furthermore, the redundacy of many of the links is not needed. Some material (i.e. calculator, links, etc.) is "lost" in the clutter.
Other Issues and Comments:
The self promotion of Jim Novo's book and consulting practices is a drawback.