Customer life time value

Two days back I got a call from one of my customer who was in need of service support. I forwarded this request to my service head and I got a reply  that I should not entertain this specific case as lot of free services have already been given and at this moment we could not be able to afford giving  free services, when business is slow and economy is weak. I was not surprised, it was absolutely correct and I agreed to that. 

I said- Okay, then in that case we need to share this with customer and ask them to help us out. We need to talk to them with proper fact and figures and seek their opinion on the issue.

When all this was happening, I was thinking how to judge whether we are over investing on some customer and under investing on others. How to decide this? There are so many factors which drive this decision and most important of them is customer life time value and customer centricity.

Customer centricity reveals how to increase profits from your best customers, finding more like them and avoid over-investing in the rest. Learn where customer relationship management went wrong and how to fix it. 

Knowing what your customers are worth is the secret to focusing your time and money, where it makes the most difference. You can’t provide all the things to all of your customers, so you need to learn to find out who really matters to your success and there comes in  – CUSTOMER LIFE TIME VALUE (CLV). CLV is the present value of the future cash flows associated with a particular customer. It’s a forward looking concept, we should not confuse with customer’s past profitability. Here one more thing I would like to add – concept of Recency & Frequency. Recency indicates how customer has done business with us recently and frequency indicates how frequently they are doing business with us.

Let me ask you one question. I have Customer-A who had purchased 10 machines from me in 2008 and after that he doesn’t  have any business with us. I have another customer, Customer-B  who has purchased 3 machines from me in 2015. In your view whose probability of buying machine in next two years is more? 

Pilots of Organisation

In today’s organisation majority of teams are quite young in age – they are hard worker, fast, agile and ready to take risk. But most of the time we found that this young team cannot achieve the desired results to the level which they could actually achieve. What may be the problem?  In 95% cases it is found that week communication, co-ordination among team members and trust deficit creates major problem which lead to rework, confusion and financial losses. Especially in manufacturing industry it has been indentified and established that most financial losses are due to some or other kind of communication gap among team members. A proposal engineer places the proposal without disclosing risk associated with it. Sales guys booking the orders with short delivery time without taking project manager into confidence. Performance of any organisation depends upon how team performs. Team need to be really strong, member should have strong bonding among themselves. 

For a moment consider that you are pilot. You are either captain or first officer, how will you work? Will you hide any information from your partner while flying the air craft? Will your ego comes in between while help or giving guidance or in sharing doubts? No it will not. You will not jeopardize your and some odd 200 passenger’s life.  

Plane crashes rarely happen in real life. Plane crashes are much more likely to be the result of an accumulation of minor difficulties and seemingly small malfunctioning. Do you know? The typical accident involves seven consecutive human errors. One of the pilots does something wrong that by itself is not an problem. Then one of them makes another error on top of that, which combine with first error, still this does not amount to catastrophe. But then they make a third error on the top of that, and then another and another and another, and it is the combination of all those errors that leads to disaster.

Above seven errors, furthermore, are rarely problems of knowledge or flying skill. It’s not that the pilot has to negotiate some critical technical manoeuvre and fails. The kinds of errors that cause plane crashes are invariably errors of teamwork and communications. One pilot knows something important and somehow doesn’t tell the other pilot. One pilot does something wrong, and other doesn’t catch the error. In 40% of the time, the two pilots have never flown together before, so they are not comfortable with each other.

So when you are working in a team, work like pilots. Don’t hide anything from your colleague, reply to their mails in time; please pick-up the calls – your colleague may have to discuss or inform you something urgent. It’s like a plan – if its crashes everyone will be killed. Your organisation may not grow; you may not get increments, management will not be happy with your team and at the end of the day it will impact your family life as well. Please remember you are pilots of your organisation, if you fail your organisation too will crash. 

The Martian by Andy Weir

Now Reading.....

The Martian, a science fiction novel, is the first published novel by American author Andy Weir. It was originally self-published in 2011 after which Crown Publishing purchased the rights and re-released it in 2014.

ANDY WEIR was first hired as a programmer for a national laboratory at age fifteen and has been working as a software engineer ever since. He is also a lifelong space nerd and a devoted hobbyist of subjects like relativistic physics, orbital mechanics, and the history of manned spaceflight. The Martian is his first novel.

I will be posting it's complete review soon... But one thing to I have to say...

This book is more science than fiction!

Killing Floor by Lee Child

After reading a Si-Fi, I was searching for a thriller novel and found this one. This book has presence in almost all top list for thriller-fiction. This is my first book from Reacher series. Liked the language, it is easy, crisp and simple. One best thing I liked most- no  big and complicated sentences, which make it fast and easy to read. Starting is impressive, high impact plot and situations. You will like the way these guys - Reacher and Finlay interact - it is awesome. Sometimes Reacher had an edge over Finlay sometimes other way round, I enjoyed this happening. 

Twist and turns are delicacies of this book. I don't know how Lee has managed this to do it in his very first book. Every chapter ends with horrifying turns...literally 360 degree turn. Unimaginable plot. It's about crime going on in America which is dangerous for its economy and currency. Story is so well crafted that it will compel you to guess and your each guess will went wrong. After some time you will stop thinking and just go along with flow of book.

Even after finishing 70% of the book, I was not  able to say with 100% confidence who is behind all the crime; who is culprit & villain in this novel.

Zoo (James Patterson novel)

This book is about human animal conflict...idea is new and author has explained the concept very well. Story starts from Botswana and cover entire part of world. A PhD dropout scientist working on theory of human animal conflicts tries to convince the world about his theory and warns the world about its serious repercussions, if something is not done in time. Author has given very good description of Lion attack in zoo and logic behind the HAC, however I did not like the part wherein one incident from India was written. While reading the indian part, I felt that author had not visited the place personally and had just Google out something to write. I enjoyed the zoo part and Botswana forest very much. (My Rating: 2/5)