Citation:
Lynette Ryals, Determining the indirect value of a customer, Journal of
Marketing Management, Volume 24, Issue 7 & 8 September 2008, Pages 847-864
Abstract:
The issue of accountability in marketing has led to a substantial and growing
body of work on how to value customer relationships. Net present value methods
(customer lifetime value / customer equity) have emerged as generally preferred
ways to assess the financial value of customers. However, such calculations fail
to take account of other important but indirect sources of value noted by
previous researchers, such as advocacy. This paper examines the development and
application of three processes to determine indirect value in business-to-
business and business-to-consumer contexts. The research shows that indirect
value has a measurable monetary impact not captured by conventional financial
tools, and that understanding this changes the way in which customers are
managed.