You may think a buck is a buck, a Euro is a Euro, no matter who pays you. But not all customers are of equal value. In this Harvard Business Review excerpt, Werner Reinartz and V. Kumar say the link between customer loyalty and profits is weak. Here is what you can do about it.
Content: Article | Authors: V. Kumar, Werner Reinartz | Source: Harvard Business School (HBS) Working Knowledge | Subjects: Customer Related, Management
Popular wisdom holds that it’s the long lifetime customers bringing in the most profits. Or is it? In this working paper, Professors Reinartz and Kumar move beyond the traditional recency, frequency and monetary value (RFM) framework, apply a new model to the profitability-lifetime problem in a non-contractual context, and examine the implications for marketing. Their results may surprise you.
Content: Article | Authors: V. Kumar, Werner Reinartz | Source: INSEAD Knowledge | Subject: Marketing / Sales