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Marketing - Customer Lifetime Value


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. We show the role that CRV plays in evaluating the importance of each customer to the firm is critical. This is because many of these same firms are using customer selection metrics like CLV (Customer Lifetime Value) to identify their “best” customers and then allocating resources to those customers with the highest CLV. In the process, these firms frequently alienate low and medium CLV customers because of the lower level service provided and the differentiated treatment. An important question is whether these low and medium CLV customers may in fact be of value to a firm due to their word-of-mouth and referrals and if so, what is this value to the firm? pdf






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Status: 05. Januar 2010