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24 February 2007 |
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Directory
Customer
Lifetime Value / Customer Lifecycle Management
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A
Modified Pareto/NBD Approach for Predicting Customer Lifetime Value |
The customer lifetime value (CLV) is the discounted value of the
future profits that this customer yields to the company. In order to
compute the CLV, one needs to predict the future number of
transactions a customer will make and the profit of these
transactions. |
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Building Successful Retail Strategies Using Customer Lifetime Value |
Lifetime value is the net present value of the profit to be realized
on the average new customer during a given number of years. It is a
wonderful concept, and can be an excellent guide to profitable
strategy. The steps you have to go through are these. |
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Corporate Valuation - The CLV-Concept and its Contribution to
Corporate Valuation |
The shareholder value and the customer lifetime value approach are
conceptually and methodically analogous. Both concepts calculate the
value of a particular decision unit by discounting the forecasted
net cash flows by the risk-adjusted cost of capital. |
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Customer Lifecycle Management (CLM) |
What it is. Customer Lifecycle Management, or CLM, is often
misunderstood to be the same principle idea as Customer Relationship
Management, or CRM. Customer Lifecycle Management, however, has a
key difference from CRM – the added factor of time. Pdf-file |
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Customer Lifetime Value, Customer Profitability, and the Treatment
of Acquisition Spending |
We observe inconsistencies in the use of two of the most important
terms in interactive marketing: customer lifetime value and customer
profitability. The major purpose of this article is to create and
clarify differences between these two terms by offering concise
definitions for both. pdf-file 2005 |
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Customer Referral Value: The Other Side of Customer Lifetime Value |
Many firms are now using viral marketing programs to harness the
power of word-of-mouth and referrals in order to acquire new
customers. We introduce the concept of Customer Referral Value (CRV)
which quantifies the value of the referrals that each customer gives
to the firm. We not only demonstrate how to measure CRV, but also
illustrate how to maximize it. |
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Getting Real About Customer Lifetime Value |
In reality very few companies can measure customer lifetime value,
making it virtually impossible to manage customer lifetime value.
Still, there are other ways to understand the intrinsic value of
customers. While they surely aren’t as precise as measuring customer
lifetime value, they nonetheless can provide powerful insights and
help management make better, more customerfocused decisions. pdf-file |
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How
Do You Value a "Free" Customer? |
Sometimes a valuable customer may be the person who never buys a
thing. In a research paper, Professor Sunil Gupta discusses how to
assess the profitability of a customer in a networked setting - a
"free" customer who nevertheless influences your bottom line. pdf |
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Incorporating Satisfaction into Customer Value Analysis: Optimal
Investment in Lifetime Value |
This paper extends the model of customer lifetime value to include
satisfaction. Customers purchase at a higher rate when they are
satisfied than when they are dissatisfied. |
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Lifetime Customer Value Calculator |
This downloadable interactive workbook, one of several
workbooks/tutorials from the HBS Toolkit used by Harvard Business
School students, is designed to help estimate the cost of acquiring
a customer and the Net Present Value (NPV) of that customer's
business during his or her economic life. |
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Modeling Customer Lifetime Value |
This article reviews a number of implementable CLV models that are
useful for market segmentation and the allocation of marketing
resources for acquisition, retention, and crossselling. |
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On
the Use of Customer Lifetime Value As a Limit on Acquisition
Spending |
The lifetime value of a customer, defined to be the expected present
value of the net cash flows from the firm’s relationship with the
customer over his or her lifetime, is often used as an upper limit
on spending to acquire the customer. The purpose of this paper is to
examine carefully this use of customer lifetime value. 1999 |
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Opportunity of a Lifetime |
We believe that companies in subscription-based businesses should
concentrate on managing the holistic customer lifecycle rather than
focusing solely on subscriber growth. |
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The
concept of the customer lifecycle management |
One page chart. pdf |
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The
Impact of Marketing-Induced Versus Word-of-Mouth Customer
Acquisition on Customer Equity Growth |
To the extent that different acquisition strategies bring different
“qualities” of customers, the acquisition effort has an important
influence on the long-term profitability of the firm. |
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Customer
Retention
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A Simple Probability Model for Projecting Customer Retention |
At the heart of any contractual or subscription-oriented
business model is the notion of the retention rate. An important
managerial task is to take a series of past retention numbers
for a given group of customers and project them into the future
in order to make more accurate predictions about customer
tenure, lifetime value, and so on. 2005 |
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Adding Value to Hotel Loyalty Programs for both Guest and Hotel |
Loyalty Programs not only encourage and reward customer loyalty
but allow a company to learn specific details about an
individual’s patterns and behaviour. However while these
programs are widely utilised little has been written about them
in tourism and hospitality marketing literature. |
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Addressing the Challenges of Customer Retention |
A formal customer retention program needs a vision, a strategy
or objective (e.g., how the bank will build customer loyalty),
and a tactical plan for success - in that order. |
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Believe It: Complaints Are Gifts |
An organization can view complaining customers as a nuisance or
use their complaints to its advantage. |
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Client retention |
Nine Values that Affect Client Retention: Michelle Katz, Autumn
1998 |
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Customer Churn - Stop it before it starts |
For subscription-based businesses, even a small reduction in
churn can have a huge impact on enterprise value. But
traditional satisfaction data and attempts to rescue departing
customers don’t get to the root causes that make customers want
to leave. Instead, companies should invest in understanding
which aspects of the customer experience drive consumer
behavior, so that they can act to reduce churn
cost-effectively. |
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Customer Loyalty Management for occasional riders |
Analysis of occasional riders' user behaviour. |
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Customer Retention Is A Process, Not An Event |
Financial services institutions (FSIs) are once again focusing
on retaining their existing customers, but with little success.
FSIs should think more strategically about retention by baking
it into every step of the customer life cycle. |
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Customer retention management processes |
This research investigates the associations between customer
retention outcomes and a number of management processes
including customer retention planning, budgeting and
accountability and the presence of a documented
complaints-handling process. |
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Customer retention: a potentially potent marketing management
strategy |
Customer retention, in the traditional marketing approach, is
seen as the 'end’ rather than the means to delivering long-term
profitability to firms. This paper discusses key issues
pertaining to customer retention management, namely its
definition, forms of measure, benefits and potential strategies
for application. |
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Customer Retention: the True Measure of Success |
Brief article. 2004 |
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How to project customer retention |
At the heart of any contractual or subscription-oriented
business model is the notion of the retention rate. An important
managerial task is to take a series of past retention numbers
for a given group of customers and project them into the future
to make more accurate predictions about customer tenure,
lifetime value, and so on. |
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Maximizing Customer Retention: A Blueprint for Successful
Contact Centers |
Effective customer retention programs are enabled by customer
relationship management (CRM) and analytics solutions. Formal
and informal contact centers need these underlying systems in
order to serve as the last line of defense for businesses that
are threatened with losing their customers to competitors. This
white paper is a blueprint for building a successful contact
center customer retention program. |
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Measuring Switching Costs and the Determinants of Customer
Retention in Internet-Enabled Businesses: A Study of the Online
Brokerage Industry |
Many emerging e-commerce companies, especially those focused on
business-to-consumer (B2C) e-commerce, are in an aggressive
phase of recruiting new customers in what analysts have called a
“land grab.” Essential to this strategy is that customers
experience some form of “lock-in” or switching costs to prevent
them from defecting to another provider; otherwise firms would be
unable to recover their initial investments in acquisition. |
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Optimizing Revenue Through Customer Retention and Delivering
Customer Value |
The purpose of this paper is to highlight how shortterm actions
based on signs of declining profits will have long-term effects
on customer loyalty and profitability. |
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Retention by Entertainment: How Companies Utilize Web Sites to
Strengthen Customer Relationships |
This paper analyzes the way how entertainment services on Web
sites are used for building relationships with customers. Our
completed research intends to find out what entertainment
factors are suitable for building relationships and what goals
companies are striving to achieve. |
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Retention Marketing Profitability - ROI Challenges Influencing
the Retention Versus Acquisition Debate |
This paper demonstrates the differences in the profitability
dynamics of retention marketing and acquisition marketing.
Reports that have shown that retaining customers is more
profitable than acquiring new customers are put into perspective
for marketing. The paper will help guide the strategic planning
and analytics around retention marketing to appropriately
prioritize marketing budgets. 2003 |
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The Effects of Advertising on Customer Retention and the
Profitability of Auctions |
A fundamental marketing problem faced by auctioneers is the
promotion of their auction in order to recruit bidders.
Merchants would like to attract as many bidders as possible to
an auction, since the higher the number of bidders, the higher
the expected winning price and profitability. This suggests that
an intense advertising campaign that raises awareness for the
largest possible customer base would be desirable. |
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The Impact of Inaccurate Color on Customer Retention and CRM |
The number of Internet purchases continues to increase, making
customer relationship management even more critical in today’s
Internet marketplace. Color inaccuracy has many negative
consequences, the most important of which is customer
defections. This paper communicates the findings of a survey
conducted to assess consumer opinions about Internet purchases. |
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The Loyalty Connection |
Secrets to customer retention and increased profits. |
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The Loyalty Connection |
Secrets To Customer Retention And Increased Profits. |
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Turning your consumers into die-hard fans |
How good are your tools for understanding consumers? The most
accurate way to measure consumers’ loyalty is to ask them just
one question — “How likely are you to recommend this product to
a friend or colleague?” 2007 |
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What, Really, is Retention Marketing ? |
With new reporting and tracking methods that reveal how
customers interact with content, customers are creating their
own brand experience. This white paper examines the changing
face of customer retention. |
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Miscellaneous Articles
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Connecting With Customers |
Does the performance you measure and reward truly match up with
your customer care goals? |
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Consumer attitude metrics for guiding marketing resource
allocation |
Marketing managers often use consumer attitude metrics such as
awareness, consideration and preference as performance
indicators. We propose four criteria – potential,
responsiveness, stickiness and sales conversion – that determine
the connection between marketing actions, attitudinal metrics,
and sales outcomes. |
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Consumer Confusion Proneness: Scale Development, Validation, and
Application |
With ever increasing amounts of marketplace information,
confusion is becoming a problem for consumers and marketers, yet
the topic remains under researched. |
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Customer Buying Process - Sowing the Seeds |
This article outlines specific ways companies can develop
insights from the customer buying process and then focus their
marketing efforts on the things that really matter. |
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Customer Migration: An Empirical Investigation Across Multiple
Channels |
This research investigates customer channel migration and the
outcome of channel migration on the drivers of customer
profitability. |
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Customer Satisfaction and Links to Customer Profitability |
An Empirical Examination of the Association between Attitudes
and Behavior. This paper explores links between customer
satisfaction, repurchase intentions, purchase behavior, and
customer profitability with empirical data on attitudes,
behavior, and profitability at the customer level of analysis.
abstract, full text available for download |
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Customer Trust & Loyalty |
Trust has become an increasingly crucial issue in consumers'
eyes. Major companies are more often viewed with distrust and
this has a major impact on buying decisions. This article argues
that companies have to establish a deliberate strategy to build
consumer trust. 2006 |
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Ethical Pricing Survey Report |
Findings from an online survey into consumer perceptions towards
ethical pricing practices |
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How Social-Cause Marketing Affects Consumer Perceptions |
A market research technique called conjoint analysis can help
managers predict what kind of affinity marketing program is
likely to offer the best return on investment for their brand.
pdf-file. 2006 |
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How to Create an Entirely Different(iated) Customer Experience |
Turning customer dissatisfaction (or even mere indifference)
into pure delight. Leaders in telecom, utilities, and insurance
are boxed in as their markets become commoditized, saturated,
and regulated. How to break out of the box and return to growth?
Reconnect creatively with customers. |
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Loyalty is worth paying for |
We are all familiar with loyalty programmes such as store cards
- but similar schemes can work well for small business, as
Stephan A. Butscher and Lindsey Clark explain. |
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Making Things Simple |
Should your cell phone play music? Should it send e-mail? Maybe
file your taxes, clean your home, and cook dinner too? By
offering customers too much, you may be driving them away. 2006 |
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Marketing and the Evolution of Customer Equity of Frequently
Purchased Brands |
The customer equity paradigm is readily implemented in
relationship businesses where the distinction between a prospect
and an existing customer is unambiguous. That enables firms in
such industries to be customer and long-term focused in the
allocation of their marketing resources. This is not the case in
frequently purchased product categories, where customers may
switch back and forth between competing brands, and even consume
multiple brands in the same time period. |
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Quality of Consumer Experience |
How to Define, Measure, & Manage What Matters Most to Your
Customers |
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Reaching the disfranchised customer |
Reaching the Disenfranchised Consumer: Martin Payne of Through
the Loop, Spring 1999 |
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The Empathy Engine |
Turning Customer Service into a Sustainable Advantage. |
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The Factor Structure of Customer Satisfaction |
The identification of the determinants of customer satisfaction
is a central concern for service management academics and
practitioners. Several methods have been proposed. |
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The Influence Of Product Variety On Brand Perception And Choice |
The authors propose that the variety a brand offers can
influence brand quality perceptions, and consequently, affect
brand choice, even when the available option set is held
constant. |
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The New Economics of Customer Loyalty Programs |
Customers want options. How to address that priority and still
turn a profit? The dynamics of frequent flier and other loyalty
programs are changing, with airlines’ strategic control over the
programs starting to slip toward the credit card companies that
serve as intermediaries between airline and customer. 2007 |
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Treasure Hunt |
There is a big difference between bargain hunting and treasure
hunting. Bargains are about price and price alone. Treasures are
about price, too, but not necessarily the lowest price. |
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Using Deep Customer Insights to Engage Consumers |
Today’s consumers are bombarded by information across an
ever-increasing number of channels, making it difficult for
companies to reach and engage them. This video explains how deep
customer insights can help companies design messaging strategies
to reach consumers when it matters most. |
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What is Customer Perceived Value? |
A description of the concept and characteristics of Customer
Perceived Value (CPV). |
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Why Customers Build Relationships with Companies - and Why Not |
Although relationship marketing has received much attention in
recent years, most of the literature focuses on benefits the
firm receives from developing relationships with customers. |
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Publications |
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Literature |
Blog Post:
Aggressive selling does not always pay off
By Dagmar Recklies
How a gas station lost me as a loyal customer by trying to sell me
their customer loyalty programme
Understanding and Managing Customer Perception
By Dagmar Recklies
In today’s
globalising economy competition is getting more and more fierce.
That means it becomes more difficult to differentiate a product or
service by traditional categories like price, quality, functionality
etc. In this situation the development of a strong relationship
between customers and a company could likely prove to be a
significant opportunity for competitive advantage. This relationship
is not longer based on features like price and quality alone. Today
it is more the perceived experience a customer makes in his various
interactions with a company (e.g. how fast, easy, efficient and
reliable the process is) that can make or break the relationship.
Needs Well Met
by Jean-Claude Saade
Like any
discipline, marketing has revisited and focused its core concepts over
time for more relevance. But for those who still believe that one of the
roles of marketing disciplines is to “create needs,” let me tell you
about an interesting marketing phenomenon.
CEOs Need To
Embrace Customer Management
By Doug Leather
Although "customer management" is still immature in most
large companies, it remains a board agenda item.
Keep
your customers, boost your profits
By Doug Leather
In today's economy, it is common knowledge that retaining customers
can be up to 100% more profitable than acquiring new ones. Research
by Gartner, Peppers & Rogers and others shows that it costs five
times as much to find a new customer as it does to keep an old one.
Despite this, customer acquisition still tends to get the lion's
share of most marketing budgets, a reality that belies the customer
management commitments many companies pay lip service to in their
marketing brochures. |
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Customer Experience Management: A Revolutionary Approach to Connecting with Your Customers
by Bernd H. Schmitt
In Customer Experience Management, renowned consultant and marketing
thinker Bernd Schmitt follows up on his groundbreaking book Experiential
Marketing by introducing a new and visionary approach to marketing
called customer experience management (CEM). In this book, Schmitt
demonstrates how to put his CEM framework to work in any organization to
spur growth, increase revenues, and transform the image of your company
and its brands.
How Customers Think: Essential Insights into the Mind of the Market
by Gerald Zaltman
Harvard Business School professor Zaltman combines academic rigor with
real-world results to offer highly accessible insights, based on his
years of research and consulting work with large clients like Coca-Cola
and Procter metaphor elicitation, response latency, and implicit
association techniques, to name a few-;that will be all-new to marketers
and demonstrates how innovators can use these tools to get clues from
the subconscious when developing new products and finding new solutions,
long before competitors do.
Converting Customer Value : From Retention to Profit
by John J. Murphy
Tackling two hot topics in business - CRM and corporate value - and
based on a study undertaken by the Customer Management Leadership Group,
John Murphy's new book links customer management directly to company
profitability for the first time. By implementing its Customer
Management Integration Framework, a company can see cash flows for each
customer relationship, and use that information to effectively manage
key customers for higher and more resilient levels of profitability.
Return on Customer : Creating Maximum Value From Your Scarcest Resource
by Don Peppers, Martha Rogers
Return on Customer is the first book to focus on how firms create value,
not just by driving current profits, but by preserving and increasing
customer lifetime value. In a powerful blend of theory and practice,
Peppers and Rogers demonstrate how to create shareholder value more
efficiently by concentrating on Return on Customer(SM), a revolutionary
business metric focused on a company’s scarcest resource – customers. |
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