Acknowledgments.
1. Customers Are Assets.
Importance of Customers.
The Gap Between Beliefs and Actions.
Bridging the Gap.
The Plan of the Book.
Summary.
2. The Value of a Customer.
Customer Lifetime Value.
Creating Metrics That Matter.
Data Requirements.
Complexity.
Illusion of Precision.
A Simple Approach.
How Reasonable Are Our Assumptions?
Margin.
Retention Rate.
Time Horizon.
Modifications and Extensions.
Margin Growth.
Improving Retention.
Finite Time Horizon.
Summary.
3. Customer-Based Strategy.
Traditional Marketing Strategy.
Value to the Firm vs. Value to the Customer.
The Two Sides of Customer Value.
Key Marketing Metrics.
Traditional Metrics.
Customer Metrics.
Traditional vs. Customer-Based Strategy: A Case Study.
Drivers of Customer Profitability.
Customer Acquisition.
Customer Margin.
Customer Retention.
Summary.
4. Customer-Based Valuation.
Customer Acquisition via Firm Acquisition.
AT&T’s Acquisition of TCI and MediaOne.
Acquisitions in the European Utility Industry.
From Customer Value to Firm Value.
The Rise and Fall of Internet Gurus.
The Eyeballs Have It–or Do They?
Customer-Based Valuation.
Drivers of Customer and Firm Value.
Impact of Marketing Actions on Firm Value.
Impact of Marketing and Financial Instruments on Firm Value.
Valuing Netflix.
Summary.
5. Customer-Based Planning.
Step 1: Customer Objectives.
The Case of Evergreen Trust.
The Case of Lipitor.
Step 2: Understanding Sources of Value to Customers.
Economic Value.
Functional Value.
Psychological Value.
Step 3: Designing Marketing Programs.
Marketing Mix–the 4 Ps.
Managing Customer Touchpoints.
Loyalty Programs.
Database Marketing.
Step 4: Customer Metrics for Assessing Effectiveness of Programs.
Choosing and Using the Right Metrics.
Summary.
6. Customer-Based Organization.
Organizational Structure.
The Case of L.L. Bean.
Incentive Systems.
Employee Selection and Training.
Customer-Based Costing.
New Metrics.
Who Needs to Do What: Tasks for Various Parties.
Harrah’s Entertainment, Inc.: A Winning Hand in a Dicey Business.
Common Mistakes in Implementing a Customer-Based Strategy.
Concluding Remarks.
Appendix A: Estimating Customer Lifetime Value (CLV).
Appendix B: Impact of Retention on Share and Profits.
Appendix C: Value of Customer Base.
Endnotes.
Index .
What's a customer really worth? Can you find out, without endlesslycomplex modeling? And once you know, what should you do with thatknowledge? Managing Your Customers as Investments has the answers.You'll learn simple ways to get reliable customer value information--ina form you can use. You'll discover how to use it to measure marketingeffectiveness, generate improvements throughout the entire customerrelationship lifecycle, and improve decision-making. Everyone tells youto manage your business around customers. This book gives you the toolsto do it.
About the Authors
SUNIL GUPTA is Meyer Feldberg Professor of Business at the Columbia Business School, Columbia University, New York. He has also taught at UCLA and the Harvard Business School; conducted seminars and consulted with companies worldwide; appeared on CNN, BBC, and PBS; and been quoted in publications, including The New York Times,The Financial Times, and The Washington Post.
Gupta's expertise is in marketing strategy, pricing, and customer management. He has published extensively on these topics. His research papers have won several awards. He serves on the editorial boards of six journals.
He is the cofounder and president of the EX Group, a strategic consulting group that specializes in customer management. He also served as an academic trustee of the Marketing Science Institute. He holds an MBA from Indian Institute of Management and a Ph.D. from Columbia University.
DONALD R. LEHMANN is George E. Warren Professor of Business at the Columbia Business School, Columbia University, New York. His research interests include modeling individual and group decision-making, empirical generalizations and meta-analysis, the introduction and adoption of new products and innovations, and measuring the value of marketing assets such as brands and customers. He has taught courses in marketing, management, and statistics at Columbia and has also taught at Cornell, Dartmouth, New York University, and the University of Pennsylvania.
Lehmann has published in and served on the editorial boards of several journals and was founding editor of Marketing Letters. His books include Market Research and Analysis,Analysis for Marketing Planning,Product Management, and Meta-Analysis in Marketing.
He served as executive director of the Marketing Science Institute and as president of the Association for Consumer Research. He is the recipient of many awards, including the 2000 Paul D. Converse award and the AMA McGraw Hill-Irwin distinguished marketing educator award. He holds an M.S.I.A. and Ph.D. from the Krannert School of Purdue University.
Gupta and Lehmann, along with Joel Steckel, are coauthors of Marketing Research.
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