TITLE

Customer Metrics and Their Impact on Financial Performance

AUTHOR(S)
Gupta, Sunil; Zeithaml, Valarie
PUB. DATE
November 2006
SOURCE
Marketing Science;Nov/Dec2006, Vol. 25 Issue 6, p718
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
The need to understand the relationships among customer metrics and profitability has never been more critical. These relationships are pivotal to tracking and justifying firms' marketing expenditures, which have come under increasing pressure. The objective of this paper is to integrate existing knowledge and research about the impact of customer metrics on firms' financial performance. We investigate both unobservable or perceptual customer metrics (e.g., customer satisfaction) and observable or behavioral metrics (e.g., customer retention and lifetime value). We begin with an overview of unobservable and observable metrics, showing bow they have been measured and modeled in research. We next offer nine empirical generalizations about the linkages between perceptual and behavioral metrics and their impact on financial performance. We conclude the paper with future research challenges.
ACCESSION #
23934034

 

Related Articles

  • IS TRUST "TRUSTWORTHY" IN CUSTOMER RELATIONSHIP MANAGEMENT? Lundstrom, William J.; Dixit, Ashutosh // Journal of the Academy of Business & Economics;3/20/2008, Vol. 8 Issue 2, p140 

    Customer relationship management has received considerable attention during the last decade but has only recently incorporated the importance of the trust factor in building the relationship. This article attempts to examine trust and allied concepts and integrate them into a new model of...

  • Bagging and Boosting Classification Trees to Predict Churn. Lemmens, Aurélie; Croux, Christophe // Journal of Marketing Research (JMR);May2006, Vol. 43 Issue 2, p276 

    In this article, the authors explore the bagging and boosting classification techniques. They apply the two techniques to a customer database of an anonymous U.S. wireless telecommunications company, and both significantly improve accuracy in predicting churn. This higher predictive performance...

  • On the Profitability of Long-Life Customers in a Noncontractual Setting: An Empirical Investigation and Implications for Marketing. Reinartz, Werner J.; Kumar, V. // Journal of Marketing;Oct2000, Vol. 64 Issue 4, p17 

    Relationship marketing emphasizes the need for maintaining long-term customer relationships. It is beneficial, in general, to serve customers over a longer time, especially in a contractual relationship. However, it is not clear whether some of the findings observed in a contractual setting hold...

  • A Methodology for Linking Customer Acquisition to Customer Retention. Thomas, Jacquelyn S. // Journal of Marketing Research (JMR);May2001, Vol. 38 Issue 2, p262 

    Customer acquisition and retention are not independent processes. However, because of data limitations, customer management decisions are frequently based only on an analysis of acquired customers. This analysis shows that these decisions can be biased and misleading. The author presents a...

  • Why customers LEAVE SUDDENLY. D'Souza, Sean // NZ Business;Jul2007, Vol. 21 Issue 6, p16 

    The article explains the importance of sequencing for retaining customers and giving them more value. It cites that a client may need to be driven back to the beginning, to systematically work through the sequence. According to the author, saying no is the best thing to do to give customers...

  • Moments of Truth. Armstrong, John // Best's Review;Apr2012, Vol. 112 Issue 12, p63 

    The article offers insights on the importance of deepening quality customer relationships to improve customer interactions and retention and maximize corporate profitability and growth in the U.S. insurance market. It says that most insurers are struggling to achieve recovery and growth as they...

  • Profitable Customer Management: Measuring and Maximizing Customer Lifetime Value. V. KUMAR; RAJAN, BHARATH // Management Accounting Quarterly;Spring2009, Vol. 10 Issue 3, p1 

    The article discusses how measuring and maximizing Customer Lifetime Value (CLV) can help companies achieve profitability and loyalty simultaneously. CLV is defined as the sum of cash flows acquired by using the weighted average cost of capital (WACC) of a customer over his entire lifetime with...

  • The Different Roles of Satisfaction, Trust, and Commitment in Customer Relationships. Garbarino, Ellen; Johnson, Mark S. // Journal of Marketing;Apr99, Vol. 63 Issue 2, p70 

    Several theories of relationship marketing propose that customers vary in their relationships with a firm on a continuum from transactional to highly relational bonds. Few empirical studies have segmented the customer base of an organization into low and high relational groups to assess how...

  • ANÁLISE DO VALOR DO CLIENTE (LIFETIME VALUE): UM ESTUDO AMBIENTADO EM UMA OPERADORA DE PLANOS DE SAÚDE. Milan, Gabriel Sperandio; Prestes, Adriano Reci; Munhoz, Luis Paolo Soares // Base;2010, Vol. 7 Issue 2, p123 

    This article presents a study undertaken in a health care plans operator with regional activities focused on business segment, and its aim is analyzing the implementation of the calculation method of customer equity (Lifetime Value) proposed by Rust et al. (2001). The study is based on concepts...

Share

Read the Article

Courtesy of VIRGINIA BEACH PUBLIC LIBRARY AND SYSTEM

Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics