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Real World Application Cases Case 4-1: Best Buy21 Best Buy's CEO, Brad Anderson has initiated a program for firing unprofitable customers while embracing profitable customers. He refers to these consumers as "devils and angels" respectively. Although devils' customers are unwanted, care must be taken not to upset these customers as they can spread negative word of mouth to other customers. Sales records and existing databases are examined to separate customers. More appealing merchandise is stocked to fit the needs of profitable customers, while intense promotions are reduced and devils are cut from marketing lists. Best Buy's strategy of separating angels from devils has taken place in about one out of every six stores. Higher operation and overhead costs are being realized but costs per store are expected to decrease as the strategy is perfected. Best Buy's plan to restructure their stores to target particular customers instead of having a universal standard is taken from the theory that a company should consider itself a collection of customers and not a collection of product lines. Each store will focus on two of the five value- based customer groups depending on the demographics of the store's location. Warranties and other services are also pushed to increase profitability, and store clerks are participating in increased training to recognize angels and learn how to effectively sell to them. Case Questions 1. What specific factors should Best Buy include in calculating its customers' lifetime value? Identify value-based segments for Best Buy and describe their typical customer profiles