Customer Segmentation Assignment Example and Life time Value Spreadsheet

Hi Class:

Thanks for getting the customer segmentation assignment in and also your input on the lifetime value of customer spreadsheets.  There are no right or wrong answers, it is perfectly ok to come up with some assumptions (as in how many times the customers repeat their purchase, could be every 2 years=0.5 or every 10 years=0.1)

For the customer segmentation assignment, I have posted 2 examples in the class blog: whereas example 1 makes good use of "combined market" approach in taking similar customer segments and finding corresponding car products/brands to match; example 2 looks closer at each segment and came up with a few brands that match well to that segment.

Also, some of you may be on to the "razor/razor blade" systems sale model - whereby you sell/give away the razor for free or at low cost, but make up the profit in the razor blade sale.  Same can be seen in the phone handsets give-aways and netbook subscription sale model at Best Buy, where the subscription plans make the profit.

I am glad some of you played around with the assumptions to see how "churning" (losing customers faster than gaining them) is costly. 

Again, feel free to contact me for specific questions on the assignments, discussions or your readings.  And, there are additional lifetime value of customer calculations on the web,  but I like the simplicity of this one.

Instructor Kelly