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The Customer Lifetime Value Concept and its Contribution to Corporate Valuation

Paper:ewp-test/9912076
From:    
Date: Tue, 13 Jan 2004 09:23:17 -0600

Title: The Customer Lifetime Value Concept and its Contribution to Corporate Valuation
Author: Hans H. Bauer (University of Mannheim) and Maik Hammerschmidt (University of Mannheim) and Matthias Braehler (Marketing Partner Consulting, Munich)
Contact:
Comments: Type of Document - pdf; prepared on WinXP; to print on HP ; pages: 21; figures: 4
Keywords: Corporate Valuation, Customer Equity, Customer Lifetime Value, Shareholder Value, Value Based Marketing
JEL: G30, M31, M41
EWPA-references: ewp-mac/0401136
Report-no: hammers040113030373 \ The shareholder value and the customer lifetime value approach are conceptually and methodically analogous. Both concepts calculate the value of a particular decision unit by discounting the forecasted net cash flows by the risk-adjusted cost of capital. However, virtually no scholarly attention has been devoted to the question if anyof the components of the shareholder value could be determined in a more marketoriented way using individual customer lifetime values. Therefore, the main objective of this paper is to systematically explore the contribution of both concepts to the field of corporate valuation. At first we present a comprehensive calculation method for estimating both the individual lifetime value of a customer and the customer equity. After a critical examination of the shareholder value concept, a synthesis of both value approaches allowing for a disaggregated and more realistic corporate valuation will be presented. \

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