Customer Value Management

Assignment Brief

Unit 38: Customer Value Management

Part A

Learning Outcomes:

• LO1: Demonstrate an understanding of the concept of customer lifetime value; how to calculate it and the different factors that influence it.

• LO2: Evaluate the different segments in a customer base and the appropriate opportunities for customer value creation.

• LO3: Analyse appropriate techniques and methods in order to increase customer lifetime value

Part B:

Using Netflix Plc Inc., you are now required to prepare an individual (10-minutes) presentation (with 5 minutes for questions) on techniques and methods used to increase customer lifetime value. To do so, you will be required to deliver your PowerPoint presentation accompanied with your speaker notes, on an analysis of the different techniques and methods organisations (Netflix Plc and its direct competitor Amazon Prime Video) can use to increase customer relationships and customer loyalty. You will finally have to use your own judgment to evaluate the appropriateness of methods and techniques chosen to be applied at each stage of the consumer decision-making process and Customer Lifetime Value.

Sample Answer

Understanding Customer Lifetime Value

Customer Lifetime Value is one of the most important concepts in customer value management. It represents the net profit a company expects to earn over the entire relationship with a customer. The calculation typically considers the average purchase value, purchase frequency, customer lifespan, and discount rate. While formulas vary, the central purpose is to move away from viewing transactions in isolation and instead focus on the enduring value of long-term relationships.

A number of factors influence this value. Customer acquisition costs directly reduce profitability, so efficient marketing spend is essential. Retention rates are equally significant, since loyal customers provide recurring revenues over time. The competitive landscape, brand positioning, switching costs, and customer satisfaction levels also play crucial roles. For a digital subscription-based business such as Netflix, churn rate is perhaps the most decisive factor shaping lifetime value, as recurring subscriptions represent the core business model.

Customer Segmentation and Value Creation

In order to create and maximise value, businesses must identify distinct customer segments. Netflix demonstrates this by analysing user demographics, preferences, and behavioural data to deliver highly personalised recommendations. This segmentation creates opportunities to increase engagement by aligning content supply with customer expectations. For example, younger audiences may value original series such as Stranger Things, while international audiences engage more strongly with regionally tailored content.

Evaluating these segments allows businesses to allocate resources strategically. High-value customers who maintain long-term subscriptions with low churn risk may be rewarded with enhanced loyalty programmes or exclusive access. Lower-value or more price-sensitive customers may be targeted with flexible plans, promotional offers, or trial periods aimed at improving retention and lifetime value.

Methods to Increase Customer Lifetime Value

Various techniques exist to extend and enhance customer lifetime value. One method involves personalisation, which strengthens engagement by tailoring the experience to the user’s preferences. Another is content diversification, which ensures that different audience segments always find appealing options. Both Netflix and Amazon Prime Video rely heavily on algorithmic recommendations to keep customers engaged, which in turn lengthens their tenure and subscription value.

Beyond this, improving the user experience through convenience, flexible pricing tiers, and multi-device accessibility further enhances retention. Loyalty can also be encouraged through social and community features, including integration of user reviews or watch parties. For subscription-based platforms, consistent innovation in content delivery and product features reduces the likelihood of churn and strengthens customer lifetime value.

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