Models of Customer Value

  • Sunil Gupta
  • Donald R. Lehmann
Part of the International Series in Operations Research & Management Science book series (ISOR, volume 121)

The Importance of Customer Lifetime Value

Customers are critical assets of any company: without customers a firm has no revenues, no profits and no market value. Yet, when a firm faces resource constraints, marketing dollars are typically among the first to be cut. Moreover, of all the senior managers, Chief Marketing Officers have the shortest average tenure. Part of this is due to the inability to show a return on marketing spending. For example, Marketing managers find it hard to quantify how much a company needs to spend to increase customer satisfaction from, say, 4.2 to 4.3 on a 5-point scale as well as what such an increase is worth.

Improving marketing metrics such as brand awareness, attitudes or even sales and share does not guarantee a return on marketing investment. In fact, marketing actions that improve sales or share may actually harm the long run profitability of a brand. This led many researchers to examine the long run impact of marketing actions on sales (e.g., Mela...


Customer Satisfaction Brand Equity Multivariate Adaptive Regression Spline Customer Retention Customer Lifetime Value 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


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Copyright information

© Springer Science+Business Media, LLC 2008

Authors and Affiliations

  1. 1.Edward W. Carter Professor of Business Administration at the Harvard Business SchoolHarvard UniversityBostonUSA

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