Customers can interact with and create value for firms in a variety of ways. This article proposes that assessing the value of customers based solely upon their transactions with a firm may not be sufficient, and valuing this engagement correctly is crucial in avoiding undervaluation and overvaluation of customers. We propose four components of a customer's engagement value (CEV) with a firm. The first component is customer lifetime value (the customer's purchase behavior), the second is customer referral value (as it relates to incentivized referral of new customers), the third is customer influencer value (which includes the customer's behavior to influence other customers, that is increasing acquisition, retention, and share of wallet through word of mouth of existing customers as well as prospects), and the fourth is customer knowledge value (the value added to the firm by feedback from the customer). CEV provides a comprehensive framework that can ultimately lead to more efficient marketing strategies that enable higher long-term contribution from the customer. Metrics to measure CEV, future research propositions regarding relationships between the four components of CEV are proposed and marketing strategies that can leverage these relationships suggested.

The authors evaluate the usefulness of customer lifetime value (CLV) as a metric for customer selection and marketing resource allocation by developing a dynamic framework that enables managers to maintain or improve customer relationships proactively through marketing contacts across various channels and to maximize CLV simultaneously. The authors show that marketing contacts across various channels influence CLV nonlinearly. Customers who are selected on the basis of their lifetime value provide higher profits in future periods than do customers selected on the basis of several other customer-based metrics. The analyses suggest that there is potential for improved profits when managers design resource allocation rules that maximize CLV. Managers can use the authors' framework to allocate marketing resources efficiently across customers and channels of communication.

The authors use panel data constructed from the responses of repeatedly surveyed top managers at 261 companies regarding their firm's market orientation, along with objective performance measures, to investigate the influence of market orientation on performance for a nine-year period from 1997 to 2005. The authors measure market orientation in 1997, 2001, and 2005 and estimate it in the interval between these measurement periods. The analyses indicate that market orientation has a positive effect on business performance in both the short and the long run. However, the sustained advantage in business performance from having a market orientation is greater for the firms that are early to develop a market orientation. These firms also gain more in sales and profit than firms that are late in developing a market orientation. Firms that adopt a market orientation may also realize additional benefit in the form of a lift in sales and profit due to a carryover effect. Market orientation should have a more pronounced effect on a firm's profit than sales because a market orientation focuses efforts on customer retention rather than on acquisition. Environmental turbulence and competitive intensity moderate the main effect of market orientation on business performance, but the moderating effects are greater in the 1990s than in the 2000s.

We develop a conceptual framework, which identifies the customer-level characteristics and supplier factors that are associated with purchase behavior across multiple channels. We also propose that multichannel shoppers provide benefits as measured by several customer-based metrics. We conduct an empirical analysis of our propositions using the customer database of a high technology hardware and software manufacturer. We find that customers who buy across multiple product categories, initiate more contacts with the firm, have past experience with the supplier through the online channel, have longer tenure, purchase more frequently, are larger and receive communication from the supplier through multiple communication channels, especially through highly interpersonal channels. We also find evidence for a nonlinear relationship between returns and multichannel shopping, and that there is a positive synergy towards multichannel shopping when customers are contacted through various communication channels. Customers who shop across multiple transaction channels provide higher revenues, higher share of wallet, have higher past customer value, and have a higher likelihood of being active than other customers.We derive several implications for managers who wish to target customers for a multichannel strategy.

No abstract