From Customer Lifetime Value to Shareholder Value Theory, Empirical Evidence, and Issues for Future Research

The authors propose a chain of effects framework for understanding how customer lifetime value (CLV) affects shareholder value (SHV). In the chain of effects framework, the authors propose that CLV serves as an intermediary in the relationship between firm actions and SHV. They also introduce the no...

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Bibliographic Details
Published inJournal of service research : JSR Vol. 9; no. 2; pp. 156 - 167
Main Authors Berger, Paul D., Eechambadi, Naras, George, Morris, Lehmann, Donald R., Rizley, Ross, Venkatesan, Rajkumar
Format Journal Article
LanguageEnglish
Published Thousand Oaks, CA Sage Publications 01.11.2006
SAGE PUBLICATIONS, INC
Subjects
Automation
Brand equity
Capitalization
Competition
Consumer behavior
Customer relationship management
Customers
Data base marketing
Lifetime
Marketing
Packaged goods
Personal computers
Profits
Purchasing
Relationship marketing
Retention
Stockholders
Studies
shareholder value
customer relationship management
customer lifetime value
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Summary:The authors propose a chain of effects framework for understanding how customer lifetime value (CLV) affects shareholder value (SHV). In the chain of effects framework, the authors propose that CLV serves as an intermediary in the relationship between firm actions and SHV. They also introduce the notion of the “prescient” value of CLV called CLV-P, which captures the impact on CLV from future modifications to a firm’s business model as well as competitive reactions. Finally, they identify econometric and data-related challenges in establishing the link, which suggest directions for future research.
ISSN:1094-6705
1552-7379
DOI:10.1177/1094670506293569