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Marketing - Understanding and Managing your Customers 

Customer Lifetime Value  / Customer Lifecycle Management
Customer Retention
Miscellaneous Articles

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Customer Lifetime Value  / Customer Lifecycle Management
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.   
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.  
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.   
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  
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  
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.   
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  
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  
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.   
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.  
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.  
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  
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.   
The concept of the customer lifecycle management One page chart. pdf  
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.   

Customer Retention

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  
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.   
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.   
Believe It: Complaints Are Gifts An organization can view complaining customers as a nuisance or use their complaints to its advantage.  
Client retention Nine Values that Affect Client Retention: Michelle Katz, Autumn 1998  
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.   
Customer Loyalty Management for occasional riders Analysis of occasional riders' user behaviour.   
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.  
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.  
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.   
Customer Retention: the True Measure of Success Brief article. 2004  
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.  
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.   
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.   
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.   
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.  
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 Top
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.   
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.   
The Loyalty Connection Secrets to customer retention and increased profits.   
The Loyalty Connection Secrets To Customer Retention And Increased Profits.   
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  
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.   

Miscellaneous Articles

Connecting With Customers Does the performance you measure and reward truly match up with your customer care goals?  
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.   
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.   
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.   
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.   
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  
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  
Ethical Pricing Survey Report Findings from an online survey into consumer perceptions towards ethical pricing practices  
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  
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.  
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.  
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  
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.    
Quality of Consumer Experience How to Define, Measure, & Manage What Matters Most to Your Customers   
Reaching the disfranchised customer Reaching the Disenfranchised Consumer: Martin Payne of Through the Loop, Spring 1999  
The Empathy Engine Turning Customer Service into a Sustainable Advantage.   
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.   
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.  
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  
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.   
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.  
What is Customer Perceived Value? A description of the concept and characteristics of Customer Perceived Value (CPV).  
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.   


Publications   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.

  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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Status: 03. Juli 2015