Summary

CPM can allow organisations to better manage their cost structures and to focus attention upon those areas that are most likely to produce the most benefits. Loyalty programmes can be shaped to encourage desired behaviour and to reward the most profitable customers. Information derived from loyalty programmes can provide key data for the design of CPM systems.

CLV and Customer Equity (CE) are key metrics that enable organisations to calculate the expected Return on Investment (ROI) of their marketing and customer profitability initiatives. CPM practices are closely associated with customer perceptions concerning the price, quality, and convenience of purchasing products or services. Customers are becoming more interested in the lifetime costs associated with their intended purchases. The total cost of ownership, particularly for high priced items, may have a significant bearing upon the value that a buyer perceives concerning that item. By obtaining a sound measure of CE, which is a measure of the expected future value of a given customer base, organisations are able to design programmes for profitably managing the opportunities presented.