This is an interactive online calculator for estimating the value that customer satisfaction and retention brings to a company. The following variables are used: the value and frequency of purchase, annual purchase rate, and referral information. The activity should take about 10 minutes, and provides a nice, interactive demonstration of the lifetime value of a customer to a company. This is a useful tool for introducing students to the concept that customer loyalty and patronage can be very financially rewarding for a company.
Students will gain an understanding of the value of customer satisfaction and retention using examples of goods or services they regularly purchase.
Target Student Population:
This tool can be easily added to an undergraduate course such as the Principles of Marketing, Marketing and Selling, Retailing, and Consumer Behavior.
Prerequisite Knowledge or Skills:
Basic marketing principles
Type of Material:
Evaluation and Observation
This tool is excellent for use in the classroom because it can be used without requiring an extensive assignment or outside reading. Students quickly see a dollar figure at the bottom of the calculator tool and this immediately brings home the importance of financial rewards from repeat customers over a long period of time. It can be used in a variety of classes.
Potential Effectiveness as a Teaching Tool
This tool is very effective since it is a very quick way to demonstrate the value that customer loyalty and continued patronage provide a company based on simple student examples. It is the easiest lifetime value calculation seen by the reviewer to use. It covers a very important marketing concept.
It is not meant to build progressively on the concept of customer value and retention.
Ease of Use for Both Students and Faculty
This tool is highly interactive and easy to use. In addition, variables can be changed to quickly see the effects. For example, students can experiment by plugging in a different number of customer referrals to determine the estimated overall effects on gross sales. The author has provided good tips on how to use it effectively.
The module links to an external site that does not provide instructions on what should be filled in and what is calculated.