Customers As Assets

Customers As Assets

Sunil Gupta and Donald R. Lehmann1

October 2001

Sunil Gupta is Meyer Feldberg Professor of business organization and Donald R. Lehmann is George E. Warren Professor of Business at Columbia Business School, Columbia University, New York, NY 10027. any correspondence should be sent to the first author at sg37@columbia.edu

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Abstract
In this paper we argue that customers are important impalpable assets of a firm and that these assets should be valued and managed. We use the judgment of customer lifetime value, show how it gouge be estimated by using easily (and in most cases publicly) available data, and how it can be used for a variety of decisions such as customer acquisition, customer retention, value-based segmentation, assessing effectiveness of marketing programs, as hale as for evaluating strategic alliances. We further show how it is possible to contact lens customer value to the value of a firm. We use this overture to value Amazon and E*Trade and show how our plan of attack cans reasonable estimates for the value of these firms while traditional financial methods fail. Finally, we set up two case studies (CDNow and AT&T Broadband) to illustrate how our get down can help in strategic decisions.





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Intangible assets are, by definition, hard to see and even harder to fix a skillful value for. But a widening consensus is growing that the splendour of such assets -- from brand names and customer lists to trademarks and patents -- means that investors withdraw to know more about them. …A task draw appointed by the Securities and Exchange Commission will itchiness the S.E.C. today to find a way to encourage companies to provide more information regarding those assets. ... As an example of possible parvenu disclosures… companies could provide estimates on the lifetime value, in terms of gross and profit, of a customer, as well as of the cost of getting new customers. The New York Times, May 22, 2001 Business experts in universal and marketing specialists in...If you want to get a full essay, rear it on our website: Orderessay



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