Linking customer lifetime value with shareholder value

The measurement of customer lifetime value has become a key issue for developing and maintaining long-term profitable customer relationships. It plays a significant role in customer acquisition and retention decisions. Given the growing importance of creating value for shareholders, market strategies have to be evaluated by their capacity to achieve this goal. Accordingly, both the acquisition and maintenance of customers must result in superior cash flows and augmented shareholder value. However, little attention has been paid to the link between customer lifetime value and shareholder value. The authors of this paper provide a conceptual framework for linking customer lifetime value to shareholder value. It is argued that customers have to be treated as assets that increase shareholder value by accelerating and enhancing cash flows, reducing cash flow volatility and vulnerability and increasing the residual value of the firm.     

Marketing metrics' usage: Its predictors and implications for customer relationship management

This research aims to determine the conditions that foster use of marketing metrics in customer relationship management (CRM) and identify the organizational factors that strengthen/weaken the impact of usage of marketing metrics on CRM performance. Based on the customer value-based theory of the firm and the contingency perspective, a research framework was developed to shed light on the predictor roles of customer value-based organizational culture and processes in determining usage of marketing metrics, and foster an understanding of the moderating roles of marketing-supply chain conflict, and innovative value proposition on the marketing metric-performance relationships. Empirical evidence from a sample of 209 business firms confirmed the main effect that customer value-based organizational culture and processes support a firm's use of marketing metrics that in turn enhance its CRM performance. Notable moderating effects were also identified. Although marketing-supply chain conflict weakens the impact of marketing metrics usage in achieving superior CRM performance, innovative value proposition strengthens the conversion of marketing-metric-related knowledge into superior CRM performance.     

Managing the trade-off between relationships and value networks. Towards a value-based approach of customer relationship management in business-to-business markets

The management of buyer-seller relationships was an early antecedent to the development of customer relationship management (CRM) concepts. Currently, CRM concepts are being challenged by the rise of value networks. Value networks can and, often, do interfere with customer relationships and thereby call for a broader range of concepts to analyze and understand relationship management and the influence of value networks on relationships. This introductory article describes the nature of the problem between relationships and value networks, reviews the current state of research, and describes the contributions of the articles presented in this special issue on CRM in business-to-business markets.     

Customer relationship management: Finding value drivers

Despite significant interest from both academicians and practitioners, customer relationship management (CRM) remains a huge investment with little measured payback. Intuition suggests that increased management of customer relationships should improve business performance, but this intuition has only inconsistent empirical or real world support. To remedy this situation, this study identifies a core group of expected CRM benefits and examines their ability to increase a firm's value equity, brand equity and relationship equity which are components of customer equity. Ten propositions explore the anticipated effects of these drivers and form an agenda for future research. These propositions establish a framework for measuring CRM and supporting the link between CRM and performance.     

Marketing competencies and the sources of customer value in business markets

This introduction to the special issue discusses the notion of marketing competencies in buyer-supplier relationships, and the role these competencies play in creating value for the customer. Existing work on the role of competencies in industrial marketing has two main foci. The first, established approach deals with competencies as inputs to organizational processes, and seeks to establish in how far marketing competencies such as customer relationship management, channel design, etc. lead to superior financial returns. The second, emerging, approach focuses on the marketing of competencies as a source for customer value. This article uses supply and demand side perspectives to look at these two approaches and suggests a typolology involving four distinct value-creation strategies. Recent literature is discussed and implications for advancing the application of resource-based thinking to industrial marketing are provided.     

The B2B-RELPERF scale and scorecard: Bringing relationship marketing theory into business-to-business practice

It is becoming increasingly important from both theoretical and managerial perspectives to measure Customer Relationship Management (CRM) as a key intangible asset. This paper seeks to bring relationship marketing theory into practice by developing a new measure of relationship performance between two firms, the business-to-business relationship performance (B2B-RELPERF) scale. Survey findings from a sample of approximately 400 purchasing managers operating in a B2B e-marketplace reveal that relationship performance is a high-order concept, composed of several distinct, yet related, dimensions: (1) relationship policies and practices, (2) relationship commitment; (3) trust in the relationship, (4) mutual cooperation; and (5) relationship satisfaction. Findings reveal that the B2B-RELPERF scale relates positively and significantly with customer loyalty. The paper also presents the B2B-RELPERF balanced scorecard, which combines tangible and intangible metrics. While existing IT solutions usually focus exclusively on the use of tangible CRM indicators, this new tool includes the “voice of the customer”. At the managerial level, both the scale and scorecard could act as useful instruments for short- and long-term management, controlling, planning, and improvement of B2B relationships. Implications for relationship marketing theory are also presented.     

Creating customer knowledge competence: managing customer relationship management programs strategically

While increasingly demanding customers have prompted many firms to implement customer relationship management (CRM) programs, little is known about the internal processes that assist organization-wide learning about individual customer relationships. This research proposes a conceptual framework about the internal processes involved in creating customer knowledge competence, which allow firms to strategically manage their CRM programs. The framework is discussed based on five case studies of Canadian financial services firms that have implemented customer relationship programs.     

A CRM performance measurement framework: Its development process and application

We suggest a performance measurement framework called a customer relationship management (CRM) scorecard to diagnose and assess a firm's CRM practice. The CRM scorecard was developed through a rigorous and stepwise development process collaborated with a number of firms in a variety of industries. During the development process, we conducted an extensive literature review to build a theoretical causal map, in-depth interviews with practitioners to extract a hierarchical map from industrial perspectives, feasibility tests to check whether or not Key Performance Indicators (KPI) could be measured, and Analytic Hierarchy Process (AHP) analysis to prioritize the evaluation factors on the CRM scorecard. The CRM scorecard contains antecedent/subsequent and objective/perceptual evaluation factors in four different perspectives to comprehensively measure corporate CRM capability and readiness. To illustrate the applicability of the proposed CRM scorecard, we apply the framework to a retail bank in Korea well-known for its exemplary CRM strategy.     

The development and diffusion of customer relationship management (CRM) intelligence in business-to-business environments

CRM data is among the most important and comprehensive information available to management in many organizations. This is particularly the case in business-to-business marketing, where the firm's extended working relationship with its customers is frequently crucial for the maintenance of a healthy business. However, in many instances management has treated CRM data as highly specific to its client relationships and has therefore neglected to analyze this information across market segments, customer categories, and customer–firm relationship forms in order to draw meaningful conclusions for driving business decisions.     

Customer value anticipation, customer satisfaction and loyalty: An empirical examination

A service-dominant logic by definition is inherently customer oriented and relational, reflecting deeper and more complex connections between suppliers and customers. The service mindset driving increased collaboration enables suppliers to have deeper insights to what customers' value. Customer value perceptions are dynamic, sometimes in constant flux, necessitating anticipatory capabilities on the part of suppliers. Yet, there is a notable lack of discussion about customer value anticipation and related empirical evidence of whether or not customers care if suppliers anticipate what they value. The authors report on two survey studies that test using structural equation modeling the notion that suppliers good at anticipating what customers will value realize higher customer satisfaction and loyalty. Understanding this relationship is critical for marketing managers wrestling with allocation of limited resources. We find that customer value anticipation is a strong driver of satisfaction and loyalty, with satisfaction acting as a mediator for loyalty.     

Driving shareholder value with customer asset management: Moving beyond customer lifetime value

Customer relationships can be conceptualized as market-based assets. Links have been shown between management of these assets and the creation of shareholder value. However, the business-to-business applications of customer asset management seem to lag behind the applications suggested in a business-to-consumer context. This occurrence is possibly related to an over-emphasis on customer lifetime value-based approaches that do not cover the complexities of business-to-business relationships. The authors posit that customer asset management applications should pay attention to all four drivers of shareholder value: revenue, cost, assets, and risk. Using as their basis a review of literature and the findings of an empirical research process consisting of three longitudinal case studies, the authors develop a conceptual framework, identify four research propositions, and outline 11 ways of managing business-to-business customer relationships for increased shareholder value. The findings from the case studies suggest that B2B firms are able to acknowledge all suggested shareholder value drivers. Findings also suggest that firms should develop customer portfolio models and differentiate their customer management concepts in order to move customer asset management beyond traditional acquisition–retention optimization.     

Managing customer share in key supplier relationships

Supply base consolidation is an important issue in many business markets. Against this background, the allocation of purchasing budgets across vendors becomes an area of vital interest to suppliers. In the present research, we argue that customer share is a key decision variable in business marketing settings and investigate how a supplier can proactively manage the share of its customer's business. We report the results of a cross-sectional study among purchasing managers in U.S. manufacturing industries. Our findings confirm the role of customer value as an antecedent to customer share in business relationships. The study further shows that customer share influences the stability of key supplier relationships. Rather than displaying a direct impact, our results suggest that trust mediates and dependence moderates the link between customer share and search for alternative suppliers. Based on these findings, we propose a framework for managing customer share in key supplier relationships. Four approaches of how industrial vendors can proactively manage customer share are discussed.     

Market-driving versus market-driven: Divergent roles of market orientation in business relationships

This study focuses on market orientation (MO) and customer intimacy (CI) in business-to-business marketing. These are generally regarded as key success factors in marketing. The authors argue, however, that the relationship between MO and customer relationship has not been properly examined, nor has its dependence on a firm's strategic market posture been understood. A contingency framework is proposed to test the postulated relationships between the key constructs. Our results indicate a strong positive association between MO and CI. Furthermore, this linkage is clearly influenced by the market focus and business logic adopted. In managerial terms, business executives must carefully match the strategic posture of the firm, its MO, and customer relationship management (CRM). Our findings strongly support a contingency modeling approach in studying the factors underlying marketing performance in business markets.     

Linking account portfolio management to customer information: Using customer satisfaction metrics for portfolio analysis

When appropriate variables are used, account portfolio analyses engender a convenient framework for the relationship composition of companies and allow management to reconsider which customers and relationship dimensions need attention. Based on an industrial company's key account relationships, the portfolio approach considered in this study employs Customer Satisfaction (CS) metrics as a portfolio dimension and suggests a new and more customer oriented approach to account portfolio analysis. Proposed portfolio matrices provide insights into the strength and stability of customer relationships. Furthermore, the matrices force managers to adopt a future perspective on customer relationships by evaluating the business potential of customers along with CS information and allow prioritization with respect to resource allocation. The study attempts to put forward customer heterogeneity in industrial markets and offers a managerial guideline embracing customer specific marketing actions. In addition, the paper proposes a new use for CS information in strategic decision making.     

Industrial distributors: Can they survive in the new economy?

As e-commerce evolves and gains power in the business-to-business (B2B) marketplace, what lies ahead for the industrial distributor? The fundamental issue from the distributor's point of view is how to compete more effectively and profitably, given the changing business environment of the new economy. This paper reviews the literature on the distributor's role and relationships and introduces a conceptual model of distributor viability. The model identifies sources of value that distributors offer to manufacturers and customers, including customer relationship management (CRM), production and operations management (POM), and knowledge management (KM). The paper explores the managerial implications of distributor relationships and sources of value. This provides the foundation for better understanding of the viability of industrial distributors in the new economy.     

Outside-in marketing: Why,when and how?

We explore the nature and evolution of outside-in marketing. Outside-in is the marketing view of strategy, with inside-out being the traditional view. We show how outside-in and inside-out clash culturally, and trade off strategically, especially in service. Technological advances in communications and information technology have enabled closer relationships with customers, and “big data” for managing those relationships. The marketing function is important for managing outside-in, because market orientation alone is insufficient. Outside-in management is most effective for focusing on customer satisfaction and revenue, since insights about customer needs and wants tend to move bottom-up through the organization. Taken to its logical conclusion, outside-in implies replacing inside-out, product-focused management (e.g., brand managers) with outside-in, customer-focused management (e.g., customer managers). Customer-focused, future-oriented metrics (e.g., customer satisfaction, customer lifetime value, customer equity) increasingly grab attention away from aggregate, short-term metrics (e.g., product sales). Long-term impact from customer-relevant issues such as discrimination plays out over time, and must be researched using longitudinal methods. Eventually, even the meaning of “outside” will change, as computers increasingly become the customer.     

基于B/S结构的销售管理系统

销售是供应链管理的重要环节,也是企业生产、管理、运作的关键。随着Internet的迅猛发展,新经济时代的销售是一个动态、渐进的过程,基于B/S结构的销售管理系统接受并应用流行于国际企业的现代营销管理的新方法,即"客户关系管理(CRM)",使销售从无序的管理走向更科学的管理,使管理者更能把握业务的中心。本文对基于B/S结构的销售管理系统的组成、功能、特点等进行了进一步的探讨。     

Demand chain management-integrating marketing and supply chain management

This paper endorses demand chain management as a new business model aimed at creating value in today's marketplace, and combining the strengths of marketing and supply chain competencies. Demand chain design is based on a thorough market understanding and has to be managed in such a way as to effectively meet differing customer needs. Based on a literature review as well as the findings from a co-development workshop and focus group discussions with marketing and supply chain professionals, a conceptual foundation for demand chain management is proposed. Demand chain management involves (1) managing the integration between demand and supply processes; (2) managing the structure between the integrated processes and customer segments and (3) managing the working relationships between marketing and supply chain management. Propositions for the role of marketing within demand chain management and implications for further research in marketing are derived.     

CRM systems and organizational learning: An exploration of the relationship between CRM effectiveness and the customer information orientation of the firm in industrial markets

The firm's customer relationship management (CRM) system is frequently a central element of the knowledge management function of the firm. It integrates information from internal and external sources to guide managers and field personnel in the development and presentation of the firm's value proposition. But despite the widespread adoption of CRM systems by firms operating in business-to-business markets, there is continued management skepticism concerning the effectiveness of these systems and their association with the firm's overall “customer information orientation.” The present study seeks to shed light on these topics by evaluating the relationship between the customer relationship orientation of the firm and its use of CRM, as well as the association of CRM use with overall firm performance in B-to-B settings across a range of traditional business performance measures. The authors employ a multi-method approach to determine the key variables, including: database currency, internal database utilization, database accuracy and performance based reward systems utilized to operationalize the construct “the firm's customer information orientation” in order to develop statistical measures of the relationships of selected variables. The results of the study provide support for the finding that customer information orientation is indeed associated with CRM system implementation and that CRM use is associated with firm performance in B-to-B markets.