Undervalued or overvalued customers: Capturing total customer engagement value

Kumar V., Aksoy L., Donkers B., Venkatesan R., Wiesel T., Tillmanns S.


Abstract
Customers can interact with and create value for firms in a variety of ways. This article proposes that assessing the value of customers based solely upon their transactions with a firm may not be sufficient, and valuing this engagement correctly is crucial in avoiding undervaluation and overvaluation of customers. We propose four components of a customer's engagement value (CEV) with a firm. The first component is customer lifetime value (the customer's purchase behavior), the second is customer referral value (as it relates to incentivized referral of new customers), the third is customer influencer value (which includes the customer's behavior to influence other customers, that is increasing acquisition, retention, and share of wallet through word of mouth of existing customers as well as prospects), and the fourth is customer knowledge value (the value added to the firm by feedback from the customer). CEV provides a comprehensive framework that can ultimately lead to more efficient marketing strategies that enable higher long-term contribution from the customer. Metrics to measure CEV, future research propositions regarding relationships between the four components of CEV are proposed and marketing strategies that can leverage these relationships suggested. © The Author(s) 2010.

Keywords
customer engagement value; customer influencer value; customer knowledge value; customer lifetime value; customer referral value



Publication type
Article in Journal

Peer reviewed
Yes

Publication status
Published

Year
2010

Journal
Journal of Service Research

Volume
13

Issue
3

Start page
297

End page
310

Pages range
297-310

Language
English

ISSN
1552-7379

DOI

Full text

Affiliation
Rijksuniversiteit Groningen; University of Virginia; Georgia State University; Erasmus School of Economics; Fordham University; Westfalische Wilhelms-Universitat Munster