Description
It is more important than ever for companies to objectively assess the value of their
customers. But conventional measures of 'customer lifetime value' haven't been linked to
overall business value, and haven't been useful to senior managers. This book overcomes
both shortcomings.Through practical examples and case studies, you'll learn a rigorous yet
simple approach to estimating the lifetime value of your customers -- and using that
information for both tactical and strategic management decision-making. You'll learn how
customer value calculations impact customer acquisition, service, retention, and
segmentation - and strategic M and A and alliance decisions. Coverage includes: linking
brand and customer assets; valuing companies based on their customer relationships;
linkages to IT, processes, and organizational structure; and much more.
Contents
Acknowledgments.
1. Customers Are Assets.
Importance of Customers.
The Gap Between Beliefs and Actions.
Bridging the Gap.
The Plan of the Book.
Summary.
2. The Value of a Customer.
Customer Lifetime Value.
Creating Metrics That Matter.
Data Requirements.
Complexity.
Illusion of Precision.
A Simple Approach.
How Reasonable Are Our Assumptions?
Margin.
Retention Rate.
Time Horizon.
Modifications and Extensions.
Margin Growth.
Improving Retention.
Finite Time Horizon.
Summary.
3. Customer-Based Strategy.
Traditional Marketing Strategy.
Value to the Firm vs. Value to the Customer.
The Two Sides of Customer Value.
Key Marketing Metrics.
Traditional Metrics.
Customer Metrics.
Traditional vs. Customer-Based Strategy: A Case Study.
Drivers of Customer Profitability.
Customer Acquisition.
Customer Margin.
Customer Retention.
Summary.
4. Customer-Based Valuation.
Customer Acquisition via Firm Acquisition.
AT&T's Acquisition of TCI and MediaOne.
Acquisitions in the European Utility Industry.
From Customer Value to Firm Value.
The Rise and Fall of Internet Gurus.
The Eyeballs Have It-or Do They?
Customer-Based Valuation.
Drivers of Customer and Firm Value.
Impact of Marketing Actions on Firm Value.
Impact of Marketing and Financial Instruments on Firm
Value.
Valuing Netflix.
Summary.
5. Customer-Based Planning.
Step 1: Customer Objectives.
The Case of Evergreen Trust.
The Case of Lipitor.
Step 2: Understanding Sources of Value to Customers.
Economic Value.
Functional Value.
Psychological Value.
Step 3: Designing Marketing Programs.
Marketing Mix-the 4 Ps.
Managing Customer Touchpoints.
Loyalty Programs.
Database Marketing.
Step 4: Customer Metrics for Assessing Effectiveness of Programs.
Choosing and Using the Right Metrics.
Summary.
6. Customer-Based Organization.
Organizational Structure.
The Case of L.L. Bean.
Incentive Systems.
Employee Selection and Training.
Customer-Based Costing.
New Metrics.
Who Needs to Do What: Tasks for Various Parties.
Harrah's Entertainment, Inc.: A Winning Hand in a Dicey
Business.
Common Mistakes in Implementing a Customer-Based Strategy.
Concluding Remarks.
Appendix A: Estimating Customer Lifetime Value (CLV).
Appendix B: Impact of Retention on Share and Profits.
Appendix C: Value of Customer Base.
Endnotes.
Index .
Features
- Linking customer lifetime value to business value: powerful techniques for both
executives and investors.
- Driving better decisions about process, organizational structure, IT, and much more.
- Includes practical, easy-to-use metrics and real-world case studies.
224 pages Hardback