Managing customers as investments : the strategic value of customers in the long run / Sunil Gupta, Donald R. Lehmann.

Format:

Book

Author/Creator:

Gupta, Sunil, 1958-

Contributor:

Lehmann, Donald R.

Language:

English

Subjects (All):

Consumers.

Consumers' preferences.

Physical Description:

xvii, 205 pages : illustrations ; 24 cm

Place of Publication:

Upper Saddle River, NJ : Pearson Education, 2005.

Summary:

It's 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. Managing Customers as Investments 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 how you can use that information to make better tactical and strategic decisions. You'll learn how customer value calculations impact customer acquisition, service, retention, and segmentation-as well as strategic M&A and alliance decisions.

Whether you're a CxO, line-of-business manager, marketer, analyst, or investor, Managing Customers as Investments will help you focus your resources where they'll deliver maximum value.

Contents:

Chapter 1 Customers are Assets 1

Importance of Customers 2

The Gap Between Beliefs and Actions 3

Bridging the Gap 6

Chapter 2 The Value of a Customer 13

Customer Lifetime Value 15

Creating Metrics That Matter 17

Data Requirements 18

Complexity 19

Illusion of Precision 20

A Simple Approach 24

How Reasonable Are Our Assumptions? 27

Margin 27

Retention Rate 29

Time Horizon 31

Modifications and Extensions 33

Margin Growth 33

Improving Retention 37

Finite Time Horizon 38

Chapter 3 Customer-Based Strategy 41

Traditional Marketing Strategy 42

Value to the Firm Vs. Value to the Customer 43

The Two Sides of Customer Value 44

Key Marketing Metrics 47

Traditional Metrics 47

Customer Metrics 48

Traditional Vs. Customer-Based Strategy: A Case Study 51

Drivers of Customer Profitability 53

Customer Acquisition 53

Customer Margin 64

Customer Retention 70

Chapter 4 Customer-Based Valuation 79

Customer Acquisition Via Firm Acquisition 81

AT&T's Acquisition of TCI and MediaOne 84

Acquisitions in the European Utility Industry 89

From Customer Value to Firm Value 90

The Rise and Fall of Internet Gurus 92

The Eyeballs Have It-or Do They? 92

Customer-Based Valuation 93

Drivers of Customer and Firm Value 98

Impact of Marketing Actions on Firm Value 99

Impact of Marketing and Financial Instruments on Firm Value 101

Valuing Netflix 102

Chapter 5 Customer-Based Planning 109

Step 1 Customer Objectives 110

The Case of Evergreen Trust 111

The Case of Lipitor 114

Step 2 Understanding Sources of Value to Customers 115

Economic Value 117

Functional Value 119

Psychological Value 120

Step 3 Designing Marketing Programs 121

Marketing Mix-the 4 Ps 121

Managing Customer Touchpoints 125

Loyalty Programs 126

Database Marketing 129

Step 4 Customer Metrics for Assessing Effectiveness of Programs 131

Choosing and Using the Right Metrics 133

Chapter 6 Customer-Based Organization 137

Organizational Structure 137

The Case of L.L. Bean 140

Incentive Systems 142

Employee Selection and Training 143

Customer-Based Costing 144

New Metrics 149

Who Needs to Do What: Tasks for Various Parties 150

Harrah's Entertainment, Inc.: A Winning Hand in A Dicey Business 156

Common Mistakes in Implementing A Customer-Based Strategy 160

Appendix A Estimating Customer Lifetime Value (CLV) 167

Appendix B Impact of Retention on Share and Profits 179

Appendix C Value of Customer Base 183.

Notes:

Includes bibliographical references and index.

ISBN:

0131428950

OCLC:

57703632