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The Customer Lifetime Value

In: Decision Making in Marketing and Finance

Author

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  • Paul Sergius Koku

Abstract

How much is a customer worth to my firm, and is the customer worth retaining? Calculating as these may sound, they are issues that today’s managers often have to wrestle with. Common as the questions are, the answers are not simple, and the fact that such questions are now the norm suggests the following: 1. There are costs associated with getting and retaining a customer. 2. Not every customer is desirable. 3. There is a connection between having a customer and profits. Commenting on the importance of customer loyalty, Reichheld states, “Experience has shown us that disloyalty at current rates stunts corporate performance by 25 to 50 percent, sometimes more. By contrast, businesses that concentrate on finding and keeping good customers, productive employees, and supportive investors continue to generate superior results. Loyalty is by no means dead. It remains one of the great engines of business success” (1996, p. 1).

Suggested Citation

  • Paul Sergius Koku, 2014. "The Customer Lifetime Value," Palgrave Macmillan Books, in: Decision Making in Marketing and Finance, chapter 0, pages 19-33, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-137-44477-6_2
    DOI: 10.1057/9781137444776_2
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