The Impact of Marketing-Induced Versus Word-of-Mouth Customer Acquisition on Customer Equity Growth

Julian Villanueva, Shijin Yoo and Dominique M. Hanssens

Chapter 11 in Long-Term Impact of Marketing:A Compendium, 2018, pp 427-459 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Companies can acquire customers through costly but fast-acting marketing investments or through slower but cheaper word-of-mouth processes. Their long-term success depends critically on the contribution of each acquired customer to overall customer equity. The authors propose and test an empirical model that captures these long-term effects. An application to a Web hosting company reveals that marketing-induced customers add more short-term value, but word-of-mouth customers add nearly twice as much long-term value to the firm. The authors illustrate their findings with some dynamic simulations of the long-term impact of different resource allocations for acquisition marketing.

Keywords: Marketing Impact; Long Term Marketing Effects; Marketing Science; Time-series Models (search for similar items in EconPapers)
JEL-codes: C01 M31 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (1)

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