Statistical Methods in Customer Relationship Management

8.4 CRM Implementation at a B2C Firm

A similar CLV management framework was also be implemented at a fashion retailer in a B2C setting. Like the IBM case study, this case study also highlights the power of the CLV metric and its related strategies in maximizing the retailer's profitability. This also showcases that CLV scores can be measured and effectively applied by the retailer to maximize both customer and store profitability. For instance, by performing segmentation, profile, and impact analysis in conjunction with the CLV score of the customers, retailers can uncover valuable customer-level insights thereby enabling them to deploy various customer management strategies. Similarly, CLV computation of customers by different stores can enable retailers to uncover some interesting and often counter-intuitive store-level insights leading to store management strategies.

8.4.1 The Focal Firm Background

The focal firm mentioned in this study is a fashion retailer, whose name is not revealed for confidentiality reasons. The retailer, which sells apparel, shoes, and accessories for both men and women, has a chain of 30 stores across the USA, with a relatively larger concentration of stores on the east and west coasts. Each of the stores was more or less of the same size and located in regions having similar demographics, thus there is no need to normalize the store's profit potential for these factors.

8.4.2 Implementing the CLV Management Framework at a Fashion Retailer

In essence, ...