TY - JOUR
T1 - Undervalued or Overvalued Customers: Capturing Total Customer Engagement Value
AU - Kumar, V
AU - Aksoy, Lerzan
AU - Donkers, Bas
AU - Venkatesan, Rajkumar
AU - Wiesel, Thorsten
AU - Tillmanns, Sebastian
PY - 2010
Y1 - 2010
N2 - 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.
AB - 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.
U2 - 10.1177/1094670510375602
DO - 10.1177/1094670510375602
M3 - Article
SN - 1094-6705
VL - 13
SP - 287
EP - 319
JO - Journal of Service Research
JF - Journal of Service Research
IS - 3
ER -