What are the disadvantages of the traditional Customer Lifetime Value Model? Especially concerning telecom business

• How should a modern Customer Lifetime Value approach look like?

  Asked by Rasim Hasanovic

  NYCO's answer:

  “The main disadvantages were related with the quality of the parameters used as input: proper churn/retention adjustment, picking the right discount rate, etc; and the proper consideration of externalities like: risk factors, walking dead, technology changes, product life cycle, etc. Unfortunately, every model remains only a valuable approach and one element of judgment and companies should not take its results as granted. The experience, intuition and wisdom of senior executives is still the key element to weigh (ponderate) results and make decisions -thanks to that, because it means guys like me have a chance to keep working, LOL- Also, measuring CLV requires deep commitment from many areas within a company (because you need input from several different departments) and the larger the company and the more complex its market, the more difficult to keep track of CLV. The main elements a good CLV model should address are: a) Transaction metrics: average value, periodicity, margin, discount rates, etc.; b) Retention: retention rate, average retention cost per customer/transaction, etc., c) Acquisition costs: cost of reaching, response rate, cost of attracting, discounts, etc.d) Externalities: walk dead rate, product life cycle, seasonal adjustments, obsolescence, etc. Then, the executive will apply his/her own wisdom 80/20, I believe right results should show a long tail. Problem: many companies will find it very expensive to apply. Solution: again, common wisdom and some simple key metrics may help as a compass to manage CLV without measuring CLV. HBS has a simple but nice calculator: http://hbswk.hbs.edu/archive/1436.html Below are some links to papers that may help your investigation. Two of them addressing the specifics of your industry: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=985639 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=605501”

Anyone familiar with the business environment in Latin America? Have heard conflicting perspectives -

• Asked by Richard Candia

  NYCO Answer:

  “Richard, you will always hear conflicting perspectives if you want to treat LATAM as a whole. The region is diverse in grades of development, political and economic systems, stability, etc. If you want to analyze business environment, you must do it country by country as they differ so much. By doing this segmentation the opinions would be much more homogeneous. I am very familiar with the region. What countries are you specifically concerned about? From my point of view, in the past 2 years, Venezuela and Bolivia are the countries with the deepest changes in business environment for political reasons and in a negative way, while Argentina and Peru had the deepest change in a positive way due to economic development.”

What Latin America's Companies must consider before going global?

To go global and expand operation overseas is an increasing trend among Latin America's business but they must consider:

1) Be sure you have a competitive edge that you will keep when going global. Sometimes, being the leader in a region doesn't necessarily mean you will remain competitive or successful when going global.
2) Make a throughout feasibility analysis and investigate the resources you will need: investments, production capabilities, logistics, etc. Are they available to support your global expansion?
3) Identify those markets that represent a closer match to your current ones first. Leave the others for a second step.
4) Study those markets in-depth and I mean in-depth.
5) Find local advisory/employees/partners that understand the culture and ways to do business in that market. Give close attention to their input.
6) Be ready to adequate your process to that market. In example, the traditional way to export products within Latin America don't work well when targeting the U.S. market neither the American approach to Federal Contracting works well in China.
7) Most companies in Latin America don't have a "global culture" so be sure that you prepare your inner organization to face the world globally.

The Monority Influence in the United States

I came across the folowing question:

America in 2012 - Opportunities and Challenges as a Result of Multiculturalism. Your opinion?

Multicultural USA in 2012. I was wondering if anyone ever pictured the USA in five years? Looking at the growth of the Hispanic and Asian population in the USA, I must admit that the country will become a major multicultural mix in five years with a redefined position on world affairs, shifted ideology and different business climate. How would it change the way we live, work and interact with each other and the world? Posted by Yuriy Boykiv on Linkedin.com

My answer:

While I agree that the multicultural picture of the United States is changing dramatically due to the increasing numbers and influence of certain minorities, specially Hispanics, I don't think you'll see traumatic changes or a deep impact within the next 5 years. Basically, because I don't share your opinion that those majorities will be able to affect the country's definition/position on world affairs. While increasingly important, the non-traditional minorities are still starting to gain public and political spaces and their economic impact or control of power is far distant from that in the hands of the majority.

The diversity among and inside those minority groups is probably one of the main obstacles for they to reach a unified stance. Without a common front, their influence and power will continue to develop slowly and they will require even larger numbers to make a significant difference.

From an economic point of view, they already reached a purchase power attractive enough to get a place among corporate strategies and increasing budgets to target them.

I would probably think in U.S. 2025 or 2050 as milestones where a significant change in the social structure of America may be witnessed. But the main issues in multiculturalism by 2025 or 2050 won't come from the United States but the consolidated -but this time- position of China and India.

Thank you for the theme. it's certainly a nice issue for debate.

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Hernan:
Great post. Thanks for the comment as I share your view on a long term effect of multiculturalism. However, I still think we will see certain changes within the next five years. Many specialists believe that the new elections will heavily depend on the Hispanic and Black voters that constitute about a quarter of the US population. By 2050 Latinos will be a dominant force in the US culture, politics and business. According to the US Census, there will be 103 million US Latinos in 2050 and the purchasing power will rise to over 10 trillion USD (currency value of 2007). I think this is major! Additionally, as Luba mentioned, a lot of new immigrants prefer a collective society, thus there will be some shift in cultural values as well.
Best,
YB

The Hispanic Entrepreneurs Toolbox: 100 Networking Resources, Guides and Links

I recently received an email from Rich McIver introducing me this new blog. I believe it has valuable information for anyone doing business with Hispanic targets or wanting to network the Hispanic community.

The link is: Hispanic Toolbox 100

Immigration Reform, Illegal Aliens and Terrorism

Illegal immigrants versus law-abiding migrations

I don't support illegal immigration nor we advocate for those aliens braking the laws. Period. Those who knowingly brake the laws are delinquents. They will keep that behavior or it will get worse -if the society doesn't enforce the laws- Law trespassers that are getting away easily, will keep trespassing other rules and conventions.

I believe this is not an issue related with general immigration policies -as every party want us to believe- but a specific political and bilateral problem. First, Mexicans don't believe in the border. They don't even believe the United States has nothing to do in those territories. For most of them, Texas, California, New Mexico, Arizona, Colorado and Nevada are rightfully Mexican territories given to the United States by corrupted governments. Mexicans don't migrate to other countries nor they have strong clusters outside the Western States. Second, Mexicans don't want nor they have an immigration policy towards people from Honduras, Guatemala or other countries in the region. It's easier for them to grant relatively secure and expedite pass for that people into the United States, transfering the problem and the burden associated with them. Recently threats by the Mexican government of lawsuits against border patrol measures only contribute to this theory. Not to mention that the U.S. government -backed by Corporate America- also confirms they are acting only for the polls and votes. They don't protest nor they answer those unacceptable statements from a foreign government, deliberately interfering with domestic affairs.

We have to separate the above mention individuals from the rest. They are not terrorists, they are not immigrants. They are illegal aliens with their own agenda. A program that has nothing to do with the American dream, the values of freedom, etc.

In next articles we will continue analyzing two more groups: refugees and those immigrants looking for the American dream and willing to join this society, aculturate and integrate. They represent the essence of what America is. They have our total support and we will always advocate for them.

Finally, we will explore a controversial subject. Immigration and terrorism. We strongly argue against naive approaches. Terrorism and Immigration are two separate things. You don't fight terrorism by fighting immigration. Most terrorists will either be American or citizens from close allied countries or will have perfectly fake American, British, Canadian passports. They won't make the lines in fron of an Embassy nor they will apply for visa extensions or change of status while in the U.S.

Some Changes inside NYCO

It has been a long journey since we started NYCO 5 years ago and we are experiencing some major changes and growing fast. I accepted to fullfil a position as CEO for Tresmontes Lucchetti (USA) a large food & beverage manufacturer with presence in more than 30 countries. So, I'm leaving my position in the line with NYCO and I'll continue overseeing the operations from the board, as Chairman and President. Leslie Tampier, will be assuming as VP of Operations (West Coast) as we are expanding our operations there and Ambassador Gabriel Guerra-Mondragón will be the VP of Operations (East Coast) in charge or current businness based in New York.

I believe those changes will expand our capabilities to provide outstanding services to our customers and I have confidence my new endevour with Tresmontes Lucchetti will be valuable for my career and help to expand the overall network for NYCO.

See you soon,

Hernan Cuevas

Hispanics & Customer Service

There is a crisis in customer service in the United States. Period. How do Hispanics respond to this scenario? This exclusive report is coming soon...

Comments from other bloggers on this issue are kindly accepted. Let's start a debate!