The Customer Lifetime Value Concept And Its Contribution To Corporate Valuation
AbstractThe 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. However, virtually no scholarly attention has been devoted to the question if any of the components of the shareholder value could be determined in a more marketoriented way using individual customer lifetime values. Therefore, the main objective of this paper is to systematically explore the contribution of both concepts to the field of corporate valuation. At first we present a comprehensive calculation method for estimating both the individual lifetime value of a customer and the customer equity. After a critical examination of the shareholder value concept, a synthesis of both value approaches allowing for a disaggregated and more realistic corporate valuation will be presented.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by EconWPA in its series Microeconomics with number 0402006.
Date of creation: 04 Feb 2004
Date of revision:
Note: Type of Document - pdf; prepared on WinXP; to print on HP;
Contact details of provider:
Web page: http://188.8.131.52
Customer Lifetime Value; Shareholder Value; Corporate Valuation;
Find related papers by JEL classification:
- D20 - Microeconomics - - Production and Organizations - - - General
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bayón, Tomás & Gutsche, Jens & Bauer, Hans, 2002. "Customer Equity Marketing:: Touching the Intangible," European Management Journal, Elsevier, vol. 20(3), pages 213-222, June.
- Hans H. Bauer & Maik Hammerschmidt & Matthias Staat, 2004.
"Analyzing Product Efficiency – A Customer-Oriented Approach,"
- Hans H. Bauer & Maik Hammerschmidt & Matthias Staat, 2004. "Analyzing Product Efficiency – A Customer-Oriented Approach," Microeconomics 0402008, EconWPA.
- Ruth N. Bolton, 1998. "A Dynamic Model of the Duration of the Customer's Relationship with a Continuous Service Provider: The Role of Satisfaction," Marketing Science, INFORMS, vol. 17(1), pages 45-65.
- Juha Karvanen & Ari Rantanen & Lasse Luoma, 2013. "Survey data and Bayesian analysis: a cost-efficient way to estimate customer equity," Papers 1304.5380, arXiv.org, revised May 2014.
- Kleshchelski, Isaac & Vincent, Nicolas, 2009.
"Market share and price rigidity,"
Journal of Monetary Economics,
Elsevier, vol. 56(3), pages 344-352, April.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (EconWPA).
If references are entirely missing, you can add them using this form.