Impact of acquisition channels on customer equity, The

Julian Villanueva (), Shijin Yoo and Dominique M. Hanssens
Additional contact information
Julian Villanueva: IESE Business School, Postal: Research Division, Av Pearson 21, 08034 Barcelona, SPAIN
Shijin Yoo: The Anderson School at UCLA
Dominique M. Hanssens: The Anderson School at UCLA

No D/516, IESE Research Papers from IESE Business School

Abstract: Customer equity (CE henceforth) is a powerful new paradigm to evaluate the firm's value and to optimally allocate marketing resources. This paper is focused on the relationship between customer acquisition and CE. The authors attempt to answer the following four questions: 1) how should customer acquisition channels be categorized to make them meaningful to managers and academics?; 2) how do we measure the effects of different acquisition channels on the firm's performance?; 3) how do we disentangle short-run effect and long-run effects?, and 4) how should the manager allocate a limited budget among the acquisition channels so as to maximize customer equity? The authors first propose a way of categorizing customer acquisition channels according to their level of contact and intrusiveness. A vector-autoregressive (VAR) model is used to examine the dynamics of acquisition channels and the firm's performance, and an empirical illustration on a surviving Internet company is provided. The results show that each cohort (i.e., customers from different acquisition channels) has different short-run and long-run effects on the firm's performance by the subsequent login and purchasing behavior. Building on previous research on optimal resource allocation, the authors develop a Marketing Decision Support System (MDSS) to help managers allocate the acquisition budget among different channels with the objective of maximizing customer equity. The consequences of naively maximizing the short-term profit and not accounting for differences in the margin contribution of different cohorts are illustrated.

Keywords: customer equity; customer acquisition; VAR; long-run modeling (search for similar items in EconPapers)
Pages: 29 pages
Date: 2003-08-02
New Economics Papers: this item is included in nep-com
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.iese.edu/research/pdfs/DI-0516-E.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: https://EconPapers.repec.org/RePEc:ebg:iesewp:d-0516

Access Statistics for this paper

More papers in IESE Research Papers from IESE Business School IESE Business School, Av Pearson 21, 08034 Barcelona, SPAIN. Contact information at EDIRC.
Bibliographic data for series maintained by Noelia Romero ().