Customer 3 has the highest SCR. Therefore, ABC Computers should identify customer 3 and target more of their marketing efforts (mailers, advertisements etc.) towards customer 3 Also, customer 3’s size-of-wallet (column A), is the largest. Important measure of customer loyalty; however, SW is unable to provide a clear indication of future revenues and profits that can be expected from a customer. | Customer Relationship Management A Databased Approach V. Kumar Werner J. Reinartz Instructor’s Presentation Slides Chapter Six Customer Value Metrics: Concepts and Practices Topics Discussed Popular Customer-based Value Metrics Strategic Customer-based Value Metrics Popular Customer Selection Strategies Lift charts Cases Customer Based Value Metrics Customer based value metrics Popular Strategic RFM Past Customer Value LTV Metrics Size Of Wallet Transition Matrix Share of Category Reqt. Share of Wallet Customer Equity Size-of-Wallet Size-of-wallet ($) of customer in a category = Sj Where: Sj = sales to the focal customer by the firm j j = firm, = summation of value of sales made by all the J firms that sell a category of products to the focal customer Information source: Primary market research Evaluation: Critical measure for customer-centric organizations based on the assumption that a large wallet size indicates more revenues and profits Example: A consumer might spend an average . | Customer Relationship Management A Databased Approach V. Kumar Werner J. Reinartz Instructor’s Presentation Slides Chapter Six Customer Value Metrics: Concepts and Practices Topics Discussed Popular Customer-based Value Metrics Strategic Customer-based Value Metrics Popular Customer Selection Strategies Lift charts Cases Customer Based Value Metrics Customer based value metrics Popular Strategic RFM Past Customer Value LTV Metrics Size Of Wallet Transition Matrix Share of Category Reqt. Share of Wallet Customer Equity Size-of-Wallet Size-of-wallet ($) of customer in a category = Sj Where: Sj = sales to the focal customer by the firm j j = firm, = summation of value of sales made by all the J firms that sell a category of products to the focal customer Information source: Primary market research Evaluation: Critical measure for customer-centric organizations based on the assumption that a large wallet size indicates more revenues and profits Example: A consumer might spend an average of $400 every month on groceries across the supermarkets she shops at. Her size-of-wallet is $400 SCR (%) of firm or brand in category = Vij / Vij j = firm, V = purchase volume, i = those customers who buy brand = summation of volume purchased by all the I customers from a firm j, = summation of volume purchased by all I customers from all j firms Information source: Numerator: volumetric sales of the focal firm - from internal records Denominator: total volumetric purchases of the focal firm’s buyer base- through market and distribution panels, or primary market research (surveys) and extrapolated to the entire buyer base Evaluation: Accepted measure of customer loyalty for FMCG categories, controls for the total volume of segments/individuals category requirements; however, does not indicate if a high SCR customer will generate substantial revenues or profits Share of Category Requirement (SCR) Computation of SCR Ratio - Example Total requirement of Notebook computers per customer A .
