Kumar (2018): A Theory of Customer Valuation: Concepts, Metrics, Strategy, and Implementation
18 important questions on Kumar (2018): A Theory of Customer Valuation: Concepts, Metrics, Strategy, and Implementation
What is the purpose of the paper by Kumar (2018)?
What is a challenge for firms according to Kumar (2018), with regards to customer value?
On which two apects is Customer Value Theory (CVT) focussing? And about which things informs CVT firms?
their nature and their scope.
It informs firms about
- The conceptualization of value generation from customers
- The ways and means available to generate and maximize value from customers.
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For which aspects can firms use the Customer Value Theory (CVT)?
- Value customer assets
- Manage customer portfolios
- Nurture profitable customers.
What are the three challenges in valuing customers?
- Firms need a reliable method to identify and invest in the “right” customers
- Configuring a portfolio of the most valuable customers is easier said than done
- Rebalancing of customers is not a feasible strategy
Why are financial theories inappropriate for valuing customers?
The article by Kumar (2018) develops CVT as....
How does customer valuation work?
- Their past and current transaction behaviours (transaction behaviour)
- Marketing efforts of firm
- Identity and profile of customers and environment
Which 4 propositions are formulated in the paper by Kumar (2018)?
- P1: Customer transaction activities significantly influence customer future profitability.
- P2: Marketing cost nonlinearly influences customer future profitability.
- P3: Demographic/firmographic variables significantly influence customer future profitability.
- P4: Economic and environmental factors significantly influence a customer’s future profitability.
What is measured using CVT and how is it measured?
- Customer’s direct economic value contribution
- Margin or net profit
- Depth of the direct economic value contribution
- Own purchases that have produced financial results
- Breadth of the indirect economic value contribution by accounting for volatility and vulnerability of customer cash flows
- Indirect value through referral behaviour, online influence, feedback, etc.
Why is it critical to study customer reactions to firm actions for organisations?
What are the benefits of studying customer reactions to firm actions for firms?
- Able to attract and retain most valuable customers
- Nurture customers into skilled resource base for firm
- Pevent customers from switching
- Consistently evolve offerings and match needs, develop ability to foresee responses, and exhibit superior performance
What are the benefits of studying customer reactions to firm actions for customers?
- Connect with firm and actively shape nature of transaction
- Connect and collaborate with each other
What are the benefits of studying customer reactions to firm actions for the environment?
What are the benefits of studying customer reactions to firm actions for the society?
- Clear line of communications in terms of what to expect
- Customer’s repeat purchases can now be consolidated among a few preferred firms
- Customers become empowered
What are the benefits of studying customer reactions to firm actions for employees?
Which two managerial implications are mentioned in the paper by Kumar (2018)?
- CVT is applicable in various scenarios spanning multiple market, business settings, regional context and industries
- Managers are enriched with improvements that can result in better implementation
What enables CVT managers to do?
customer contributions through specialized customer strategies – creates positive impact on firm performance
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