THE CUSTOMER LIFETIME VALUE CONCEPT AND ITS CONTRIBUTION TO CORPORATE VALUATION

Hans H.Bauer, Maik Hammerschmidt () and Matthias Braehler
Additional contact information
Hans H.Bauer: University of Mannheim
Matthias Braehler: Marketing Partner Consulting, Munich

Microeconomics from EconWPA

Abstract: The shareholder value and the customer lifetime value approach are conceptually and methodically analogous. Both concepts calculate the value of a particular decision unit by discounting the forecasted net cash flows by the risk-adjusted cost of capital. However, virtually no scholarly attention has been devoted to the question if any of the components of the shareholder value could be determined in a more marketoriented way using individual customer lifetime values. Therefore, the main objective of this paper is to systematically explore the contribution of both concepts to the field of corporate valuation. At first we present a comprehensive calculation method for estimating both the individual lifetime value of a customer and the customer equity. After a critical examination of the shareholder value concept, a synthesis of both value approaches allowing for a disaggregated and more realistic corporate valuation will be presented.

Keywords: Customer Lifetime Value; Shareholder Value; Corporate Valuation (search for similar items in EconPapers)
JEL-codes: D20 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mic
Date: 2004-02-04
Note: Type of Document - pdf; prepared on WinXP; to print on HP;
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://128.118.178.162/eps/mic/papers/0402/0402006.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpmi:0402006

Access Statistics for this paper

More papers in Microeconomics from EconWPA
Series data maintained by EconWPA ().