Implementing profitability through a customer lifetime value management framework

Kumar, V.; Venkatesan, R.; Rajan, B.

doi:10.2478/gfkmir-2014-0076

.blurhash-client-img { display: none !important; }

Implementing profitability through a customer lifetime value management framework

NIM Marketing Intelligence Review

Volume 1 (2009): Issue 2 (November 2009)

By: V. Kumar, R. Venkatesan and B. Rajan

Open Access

|Jul 2014

Abstract

Global CRM software spending was $7.8 billion in 2007 and is projected to reach $8.9 billion in 2008. Further, CRM software sales will touch $13.3 billion by 2012. These software and processes have made it possible for companies to gather and analyze large amounts of data on their existing and prospective customers. This article shows how customer-level data can lead to increased customer profitability through (a) selection of the right customers by using the Customer Lifetime Value (CLV) metric, (b) the nurturing of those right customers and, © re-allocation of resources to the profitable customers. Due to this approach profitable management of individual customers is the basis for growth in firm profitability. A case study will show how IBM used CLV as an indicator of customer profitability and allocated marketing resources based on CLV

References

Donkers, B., Peter C. Verhoef and M.G. de Jong (2007), “Modeling CLV: A Test of Competing Models in the Insurance Industry”, Quantitative Marketing and Economics, Vol. 5, No. 2. (June 2007), pp. 163 - 190.10.1007/s11129-006-9016-y
Search in Google Scholar
Kumar, V., Denish Shah and Rajkumar Venkatesan (2006), “Managing Retailer Profitability - One Customer at a Time!” Journal of Retailing, 82(4), pp. 277 - 294.10.1016/j.jretai.2006.08.002
Search in Google Scholar
Kumar, V., Rajkumar Venkatesan, Tim Bohling and Denise Beckmann (2008), “The Power of CLV: Managing Customer Lifetime Value at IBM”, Marketing Science, 27(4), pp. 585 - 599.10.1287/mksc.1070.0319
Search in Google Scholar
Ramani, Girish and V. Kumar (2008), “Interaction Orientation and Firm Performance”, Journal of Marketing, 72(1), pp. 27 - 45.10.1509/jmkg.72.1.027
Search in Google Scholar
Reinartz, Werner J., and V. Kumar (2003), “The Impact of Customer Relationship Characteristics on Profitable Lifetime Duration”, Journal of Marketing, 67(1), pp. 77 - 99.10.1509/jmkg.67.1.77.18589
Search in Google Scholar
Venkatesan, Rajkumar and V. Kumar, (2004), “A Customer Lifetime Value Based Framework for Customer Selection and Resource Allocation Strategy”, Journal of Marketing, 68 (October), pp. 106 - 25.10.1509/jmkg.68.4.106.42728
Search in Google Scholar
Venkatesan, Rajkumar, V. Kumar and Tim Bohling (2007), “Optimal Customer Relationship Management Using Bayesian Decision Theory: An Application for Customer Selection”, Journal of Marketing Research, 44 (November), pp. 579 - 594.10.1509/jmkr.44.4.579
Search in Google Scholar

DOI: https://doi.org/10.2478/gfkmir-2014-0076 | Journal eISSN: 2628-166X

Journal RSS Feed

Language: English

Page range: 32 - 43

Published on: Jul 19, 2014

Published by: Nuremberg Institute for Market Decisions

In partnership with: Paradigm Publishing Services

Publication frequency: 2 issues per year

Keywords:

CRM,

Customer Lifetime Value,

return on marketing contacts

Related subjects:

Business and economics,

Political economics,

Public finance and fiscal theory,

Business management,

Marketing, sales, customer relations,

Management, organization, corporate governance,

Business management, other

© 2014 V. Kumar, R. Venkatesan, B. Rajan, published by Nuremberg Institute for Market Decisions
This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Previous article Volume 1 (2009): Issue 2 (November 2009)Next article