Individual Application #2
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Miami Dade College, Miami *
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2604
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Information Systems
Date
Apr 3, 2024
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docx
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Uploaded by KidGorillaPerson1750
Individual Application #2
Question 1
: Using Module 2 Unit 3 as a base, and the concepts from Module
4, discuss the best ways in which a company of your choosing can measure the
actual
and the
potential
value of its
existing customers.
It can be a Business-to-business (B2B) or business-to-consumer (B2C) company.
In other words, if you were a marketing manager in charge of differentiating existing customers for the organizations above:
1.
Based on Module 4 Unit 1 page 8, actual value is how we know the existing customer interacts with the company already and/or know how
to predict their behavior. Using a business-to-consumer (B2C) company
like Ulta Beauty, in order to quantitatively measure the actual value for
the existing customers, I would have to conduct a RFM analysis tracking their behavioral loyalty. Using Module 2 Unit 3 page 9, I can the track the time elapsed since the customer’s last purchase made at Ulta (recency). Customers who have made recent purchases are more likely to be actively engaged and contribute value to Ulta Beauty’s revenue. I would then analyze the number of purchases made by the existing customer in a week (frequency). Customers with higher frequency demonstrate loyalty and ongoing engagement. If the customer is consistently making purchases throughout the week, for example, it helps identify the number of times they go to visit the store
to buy a product they need or want. And evaluating the monetary value of each customer’s purchases over a month (monetary). Customers with higher monetary values contribute more significantly to Ulta Beauty's revenue. Quantifying the monetary aspect allows for the identification of high-value customers whose purchases have a substantial financial impact. According to Module 2 Unit 3 page 4, lifetime value can be used to predict future or potential profitability from each customer group. It also states that the potential value of a exisiting customers is all future net profits minus the current value of today. By considering the future impact of a customer's actions, including purchases, referrals, and other interactions, CLV quantifies the potential long-term value that a customer can bring to Ulta Beauty.
The time-weighted analysis in CLV recognizes that the value of future contributions may be different, and it adjusts these values to their present worth. This accounts for potential changes in customer behavior over time. The prediction of trajectory can also help identify opportunities for increasing potential value according to Module 4 Unit 1 page 8. 2.
For Ulta Beauty, to distinguish great customers from poor customers is by tracking customer engagement and interaction. For example, loyal customers make great customers which means they will continuously engage with the company’s products or services and stay away from
other competitors, in this case Sephora. Great customers would engage actively participate in loyalty programs, leave product reviews,
referrals, and participate in feedback surveys. Poor customers would have minimal interaction with the company, not caring for any loyalty programs, and/or would probably just shop for a specific product because they need it. Poor customers would also switch from Ulta Beauty to another company of their preference. Another way to distinguish is cross-sell and upsell opportunities, great customers would frequently explore and purchase complementary products. Great customers leverage cross-sell and upsell opportunities, leading to higher average transaction values. Poor customers would not explore additional products, limiting their overall contribution per transaction. Question 2:
Beauty Enthusiasts: Customers who are passionate about beauty trends, new releases, and staying updated on the latest products. They seek exclusive access to new product launches, limited-edition items, and prefer personalized recommendation based on their beauty references. Routine Shoppers: Customers with established beauty routines, seeking regular self-care everyday products. They prioritize convenience, discounts on staple items, and automatic refillable services. Occasional Shoppers: Customers who purchase beauty products occasionally, especially during special occasions or events. They are interested in curated beauty collections for specific occasions, such as weddings, parties, or holidays. Beauty Educators: Customers who enjoy learning about skincare routines, makeup techniques, and beauty tips. They seek educational content, tutorials, and in-store beauty consultations to enhance their knowledge. Budget-Conscious Shoppers: Customers who prioritize affordability and look for budget-friendly beauty options. They seek promotions, discounts, and value-for-money product recommendations. Luxury Beauty Seekers: Customers with a preference for high-end and luxury beauty brands. They desire premium products, exclusive brand collaborations, and personalized consultations with Ulta Beauty experts for a luxury shopping experience.
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