Determining the indirect value of a customer

Date published

2008-09-01T00:00:00Z

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Publisher

Westburn Publishers

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Article

ISSN

0267-257X

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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.

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Github

Keywords

Customer lifetime value, Customer equity, Indirect value, Advocacy

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