Undervalued or Overvalued Customers: Capturing Total Customer Engagement Value
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Date
2010-08-11
Publication Type
Journal Article, Journal Article
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no
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Abstract
Customers can interact with and create value for firms in a variety of ways. This article proposes that assessing the value of customers based solely upon their transactions with a firm may not be sufficient, and valuing this engagement correctly is crucial in avoiding undervaluation and overvaluation of customers. We propose four components of a customer’s engagement value (CEV) with a firm. The first component is customer lifetime value (the customer’s purchase behavior), the second is customer referral value (as it relates to incentivized referral of new customers), the third is customer influencer value (which includes the customer’s behavior to influence other customers, that is increasing acquisition, retention, and share of wallet through word of mouth of existing customers as well as prospects), and the fourth is customer knowledge value (the value added to the firm by feedback from the customer). CEV provides a comprehensive framework that can ultimately lead to more efficient marketing strategies that enable higher long-term contribution from the customer. Metrics to measure CEV, future research propositions regarding relationships between the four components of CEV are proposed and marketing strategies that can leverage these relationships suggested.
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Publication status
published
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Editor
Book title
Journal / series
Volume
13 (3)
Pages / Article No.
297 - 310
Publisher
SAGE
Event
Edition / version
Methods
Software
Geographic location
Date collected
Date created
Subject
customer engagement value; customer lifetime value; customer knowledge value; customer influencer value
Organisational unit
03995 - von Wangenheim, Florian / von Wangenheim, Florian