Customer valuation as a foundation for growth

Customers differ widely in the long‐term value they represent to a company, and the “best” customers are often many times more valuable than the average ones. Cites four customer value components: acquisition cost, revenue stream, cost stream and length of relationship. Argues that by understanding and managing lifetime customer value, a company not only allocates resources to its customers more effectively, but also becomes better able to focus on developing long‐term customer relationships. Examines ways to calculate lifetime customer value and use it as the basis for strategy development.