Most Valuable Customer of Verizon

Customer Satisfaction, Loyalty, Management and Empowerment

I am not sure if I would be considered a most valuable customer at Verizon, but I am guessing not. I am a relatively low revenue customer for them, basically an average customer in terms of what they would make off of me. If you consider the different elements that go into a most valuable customer, they are the profitability, the timing of the revenue, the referrals that such customers can generate, their retention, the add-ons and the customer's brand, and feedback (Moltz, 2015). Of these, maybe on retention, but otherwise I would consider myself to be a generally average customer. Corporate customers are worth a lot more money, and there are consumers who are generally bigger spenders with add-ons and the like.

The lifetime value of a most valuable customer would be unknown. Corporate customers are the most valuable, and each of them is unique. When a company like Verizon does comprehensive service with a large corporate customer, the contract is negotiated directly with that company so I have actually no idea what such a company would be worth. But for a high end retail customer, there are some calculations that can be done. Something like the More Everything Plan is $80 per month. Taking the average margin that Verizon earns, which is 7.72%, that's a profit of $6.17 per month. There are twelve months in a year, and we will assume 10 years. The value of such a customer would be $740.40 in raw dollars over the course of that person's lifetime. It is not hard to see why such customers are not really MVCs, but they are among the more lucrative customers for a company like Verizon. Verizon needs to have millions of those types of customers for it to be worthwhile -- every 1 million customers like that is worth $740 million to Verizon, and they have tens of millions of customers. So even though that one individual customer is not really worth that much, Verizon's retail business model is built around acquiring those types of customers for fairly low money, and by the million.

These larger plans are better for Verizon, but they often offer good value to the customer as well. Verizon makes less money on customers with smaller plans, so they want to entice people to the larger plan, since they already have the network in place and do not need to increase their fixed costs in order to sell a few more gigabytes to an existing customer. So Verizon seeks to encourage customer to become this sort of MVC.

The Verizon brand empowers the customers a little bit, in that they are able to tailor their plan to meet their own individual needs. The customer therefore feels as though they have the choice to moderate their own spending and consumption, even though they are being encouraged to spend more. But Verizon can provide information to the customer on their data usage so that the customer can make an informed decision. There are also community forums so that customers can get advice and help each other out with issues, rather than strictly relying on the company.

Verizon also provides for its customers a loyalty plan, called Smart Rewards. It is a relatively new development. Normally, in the phone business people are tied to a company by contract, and then the companies essentially compete for new business every time someone's contract comes up and they need a new phone. With the Smart Rewards program, customers earn points that can be redeemed for savings on merchandise with Verizon partners (Verizon, 2015). This is a means of offering benefits to Verizon customers that can serve an enticement for people to join Verizon, or to continue to be a Verizon customer, if they like the rewards and find that the plan is adding value to some of their other purchases.