Comparison between Customer Lifetime Value (CLV) and Traditional Measurement Tools of Customer Value

Romanian international volume name: Turismul rural românesc în contextul dezvoltării durabile. Volume number: Volume XIII. Coordinators: I. Moraru, I. Talabă, A. Haller, D. Ungureanu, 2011. ISSN/ISBN: 978-973-702-858-7, p.122-131

8 Pages Posted: 18 Feb 2013

See all articles by Talaba Monica

Talaba Monica

Alexandru Ioan Cuza University

Date Written: April 1, 2011

Abstract

Customer Lifetime Value (CLV), i.e. the present value of the monetary flows associated to the customer along his entire relationship with the company, has lately been a major topic of interest to researchers. Compared to traditional measurement tools, such as RFM (Recency, Frequency, Monetary Value), SOW (Share of Wallet), PCV (Past Customer Value) or CPA (Customer Profitability Analysis), CLV is more efficient in selecting profitable customers and subsequently, marketing resources will be better allocated and the segmentation of customers will be more efficient. Nonetheless, CLV is less used in the marketing practice of companies, especially due to the need of data, some aspects related to modeling (allocation of costs, accuracy of predictions) and the need of the change of the company’s philosophy, from product orientation to client orientation.

Keywords: CLV, customer value, RFM, customer segmentation

JEL Classification: M30

Suggested Citation

Monica, Talaba, Comparison between Customer Lifetime Value (CLV) and Traditional Measurement Tools of Customer Value (April 1, 2011). Romanian international volume name: Turismul rural românesc în contextul dezvoltării durabile. Volume number: Volume XIII. Coordinators: I. Moraru, I. Talabă, A. Haller, D. Ungureanu, 2011. ISSN/ISBN: 978-973-702-858-7, p.122-131 , Available at SSRN: https://ssrn.com/abstract=2219952

Talaba Monica (Contact Author)

Alexandru Ioan Cuza University ( email )

Carol I Blvd, Nr.11
Lasi, 700506
Romania

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
646
Abstract Views
3,140
Rank
71,505
PlumX Metrics