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Customer Metrics and Their Impact on Financial Performance

Author

Listed:
  • Sunil Gupta

    (Harvard Business School, 179 Morgan, Soldiers Field, Boston, Massachusetts 02163)

  • Valarie Zeithaml

    (Kenan-Flagler School of Business, University of North Carolina at Chapel Hill, 4207 McColl, North Carolina 27599)

Abstract

The need to understand the relationships among customer metrics and profitability has never been more critical. These relationships are pivotal to tracking and justifying firms' marketing expenditures, which have come under increasing pressure. The objective of this paper is to integrate existing knowledge and research about the impact of customer metrics on firms' financial performance. We investigate both unobservable or perceptual customer metrics (e.g., customer satisfaction) and observable or behavioral metrics (e.g., customer retention and lifetime value). We begin with an overview of unobservable and observable metrics, showing how they have been measured and modeled in research. We next offer nine empirical generalizations about the linkages between perceptual and behavioral metrics and their impact on financial performance. We conclude the paper with future research challenges.

Suggested Citation

  • Sunil Gupta & Valarie Zeithaml, 2006. "Customer Metrics and Their Impact on Financial Performance," Marketing Science, INFORMS, vol. 25(6), pages 718-739, 11-12.
    • Handle: RePEc:inm:ormksc:v:25:y:2006:i:6:p:718-739
    DOI: 10.1287/mksc.1060.0221
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