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• Total value provided by customers to the firms through their (a) purchase transactions with the firm, (b) ability to refer other customers to the firm, (c) power to positively influence other customers about the firm’s offerings , and (d) knowledge about the firm’s product/service offerings in providing a feedback to the firm.
Customer Engagement Value (CEV)
Customer Lifetime Value (CLV)
Net present value of future cash flows
from a customer over his/her lifetime with
the company
Customer Referral Value (CRV)
Quantifiable measure of the type, quantity,
& effectiveness of paid referrals that an individual customer provides to others
BRVi – Business Reference Value of current customer reference iDOIin – Degree of Influence of current customer reference i on client customer nRefn – Degree that references impacted new client customer’s n-th purchase decisionProfitn – Profitability of new client customer nN – Total number of new client customersr – Discount rate (in months)tn – month that new client customer n became a customer
To understand the value and influence of business references, we provide an empirical example with two B2B firms from different industries over a 6 year time period:
“If you make customers unhappy in the physical world, they mighteach tell 6 friends. If you make customers unhappy on the Internet, theycan each tell 6,000 friends.”
• “When you have a brand like ours that has such high awareness and knowledge, traditional brand tracking is not helpful, so things like social listening, active communities, those are better place for us to put our investments”
Seth Farbman,
Global CMO, Gap Inc
• “We are trying to institute tools from social media listening perspective to provide insights to our brands for new product opportunities”
Frank Cotignola,
Consumer insights manager of knowledge sharing and social media at Kraft’s CIS center of
Excellence
• “Are there human behavioral cues in the social conversation that allows us to determine future brand relevance, reinforcement or reinvention, or natural untapped opportunities?”
David Bradfield,
Director of marketing strategy and social experience