Donald Lehmann

Customers as Assets

Coauthor(s): Sunil Gupta. View Publication

Abstract:
Customers are important intangible assets of a firm that should be valued and managed. Although researchers have recently emphasized customer relationships and lifetime value, these concepts have had limited impact on the business and investment community for two main reasons: they require extensive data and complex modeling, and researchers have not shown a strong link between customer and firm value. These issues are addressed first by showing how publicly available information and a simple formula can estimate the lifetime value of a customer; and second, by providing a link between customer and firm value. This link provides guidelines for strategic decisions, such as mergers and acquisitions, as well as for assessing the value of a firm even when the traditional financial approaches fail.

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