“Financial Value of Customer Satisfaction: Using a Lifetime Value Calculator”
Financial Value of Customer Satisfaction: Using a Lifetime Value Calculator
Feb 21, 2013
- 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.
- Type of Material:
- Recommended Uses:
- In-class exercise
- Technical Requirements:
- Browser only
- Identify Major Learning Goals:
- 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
- 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.
- 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.
- 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.
- Creative Commons: