Marketing Actions and the Value of Customer Assets

Abstract

This article develops a framework for assessing how marketing actions affect customers’lifetime value to the firm. The framework is organized around four critical actions that firms must take to effectively manage the asset value of the customer base: database creation, market segmentation, forecasting customer purchase behavior, and resource allocation. In this framework, customer lifetime value is treated as a dynamic construct, that is, it influences the eventual allocation of marketing resources but is also influenced by that allocation. By viewing customers as assets and systematically managing these assets, a firm can identify the most appropriate marketing actions to acquire, maintain, and enhance customer assets and thereby maximize financial returns. The article discusses in detail how to assess customer lifetime value and manage customers as assets. Then, it identifies key research challenges in studying customer asset management and the managerial challenges associated with implementing effective customer asset management practices.