Abstracts
This chapter provides a holistic view from customer profitability to customer value creation. In particular, it discusses a fuller range of measures of these two dimensions and their use to monitor corporate performance. Customer profit and customer value are two interrelated concepts, but there exists priority conflict. Traditional customer profitability is an accounting concept, with less contextual meaning in financial value. A complete view from customer profit to customer value creation permits management to manage the firm from these two dimensions and strike the balance between short-term to long-term goals. Furthermore, this chapter discusses in a great length the concept of customer lifetime value and the application of this concept to evaluate customer value contribution. The customer lifetime value concept is particularly relevant in today’s e-business valuation. Their use and implications are discussed.
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Notes
- 1.
For simplicity, I prefer a broader definition of cost of capital to the traditional weighted average cost of capital (WACC).
- 2.
See Gupta and Lehmann (2003). Customers as Assets. Journal of Interactive Marketing. Vol.17, 1, pp. 9–24.
- 3.
Gupta et al. (2004). JMR, Feb. Vol.41.
- 4.
Extracted from Los Angeles Time, 24th of July, 2000.
References
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Li, W.S. (2018). From Customer Profit to Customer Value. In: Strategic Management Accounting. Management for Professionals. Springer, Singapore. https://doi.org/10.1007/978-981-10-5729-8_5
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DOI: https://doi.org/10.1007/978-981-10-5729-8_5
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