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Title: Measuring and maximizing customer equity: a critical analysis
Author: V. Kumar and Morris George
Journal: Journal of the Academy of Marketing Science
Volume: 35
Number: 2
Pages: 157--171
Year: 2007
DOI: 10.1007/s11747-007-0028-2
Abstract: Customer equity, the asset value of customers, can be measured using different aggregate- and disaggregate-level approaches. The authors compare how customer equity is measured and maximized under various approaches. We find that, in the disaggregate-level approach, customer lifetime value is maximized by implementing customer-level strategies such as optimal resource allocation, purchase sequence analysis and balancing acquisition and retention spending. At the aggregate-level, improving the drivers of customer equity maximizes customer equity. A comparison of different aggregate approaches shows that, while an emphasis on retention is a common feature across approaches, conceptual differences in terms of accounting for existing customers and prospects, acquisition, and the projection period exist across the different approaches. The authors propose a hybrid approach, which addresses the issues and challenges in existing approaches and helps firms to measure and manage customer equity.



@Article{kumar07a,
  author =	 {V. Kumar and Morris George},
  title =	 {Measuring and maximizing customer equity: a critical
                  analysis},
  journal =	 {Journal of the Academy of Marketing Science},
  year =	 2007,
  volume =	 35,
  number =	 2,
  pages =	 {157--171},
  abstract =	 {Customer equity, the asset value of customers, can
                  be measured using different aggregate- and
                  disaggregate-level approaches. The authors compare
                  how customer equity is measured and maximized under
                  various approaches. We find that, in the
                  disaggregate-level approach, customer lifetime value
                  is maximized by implementing customer-level
                  strategies such as optimal resource allocation,
                  purchase sequence analysis and balancing acquisition
                  and retention spending. At the aggregate-level,
                  improving the drivers of customer equity maximizes
                  customer equity. A comparison of different aggregate
                  approaches shows that, while an emphasis on
                  retention is a common feature across approaches,
                  conceptual differences in terms of accounting for
                  existing customers and prospects, acquisition, and
                  the projection period exist across the different
                  approaches. The authors propose a hybrid approach,
                  which addresses the issues and challenges in
                  existing approaches and helps firms to measure and
                  manage customer equity.},
  doi = 	 {10.1007/s11747-007-0028-2}
}
Last modified: Wed Mar 9 10:16:52 EST 2011