Why do banks retain unprofitable customers? A customer lifetime value real options approach

Suárez, Mariano Méndez; Crespo‐Tejero, Natividad

doi:10.1016/j.jbusres.2020.10.008

Cited by 13 publications

(12 citation statements)

References 31 publications

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“…For example, the costing approach regularly assumes that the associated consequences will be completed within the sales period. In addition, average costs for each customer relationship are assumed [10,31,32], and sometimes, the cash flows are corrected by different factors that attempt to take the average risk into account. The standard assumptions lead to mismanagement.…”

Section: Evaluation Levels For Customer Relationships In New Business...mentioning

confidence: 99%

Customer Relationship Management in New Business Models

Röser

2024

Business Ethics - The Competitive Advantage of Trust and Reputation [Working Title]

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Customer relationship management is essential because companies are customer-centric, especially in new business models. In some sectors, each individual customer can determine the company’s success in a significant extent. A well-founded decision-making process reduces the number of critical situations, particularly in volatile markets. Furthermore, a trustful customer relationship has several advantages, for example, reduced transaction costs with less information asymmetries. A forward-looking customer relationship management anticipate relevant factors at an earlier stage in the decision-making process. New business models require a more precise customer and accompanying risk analysis, which allows an effective view of the customer’s life cycles. In this context, an innovative management accounting approach for customer relationships is necessary. The managerial implications derived from such processes crucially hinge among other things on the risk assessment. Consequently, this article presents a systematic customer-oriented calculation approach to evaluate customer relationships in new business models. Considering the multifactorial perspective, simulation techniques are a useful approach to solve sophisticated decision situations for shaping customer relationships. The introduced approach can be transferred to other sectors with important customer-centric relationships.

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Section: Evaluation Levels For Customer Relationships In New Business...mentioning

confidence: 99%

Customer Relationship Management in New Business Models

Röser

2024

Business Ethics - The Competitive Advantage of Trust and Reputation [Working Title]

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“…Last but not least, the model proposed in this study can also benefit other areas within the hospitality industry. As one of the core attributes to evaluate the worth of customers to organisations (Méndez-Suárez and Crespo-Tejero, 2021), this study provides an overarching model that can apply to hotel or airline industries. In their research, Hyun and Perdue (2017) suggested the importance of evaluating the concept of lifetime for both hotel and restaurant businesses and provided insights for both types of business.…”

Section: Managerial Implicationsmentioning

confidence: 99%

Customer lifetime value: the effect of relational benefits, brand experiences, quality, satisfaction, trust and commitment in the fast-food restaurants

Dandis

Eid

Griffin³

et al. 2023

TQM

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PurposeThis study examines factors that affect customer lifetime value (CLV) in fast-food restaurants (FFRs) in Jordan. These factors are relational benefits, brand experiences, service quality (SQ), satisfaction, trust and commitment.Design/methodology/approachAn online survey was collected from a sample of 503 respondents. The authors used SPSS to test the constructs' relationships and analyse the data. SmartPLS was used to test the hypotheses.FindingsIn contrast to previous studies, not all dimensions of brand experiences and relational benefits had a significant and positive influence on relationship marketing outcomes (satisfaction, trust and commitment). On the other hand, results demonstrated that SQ had a significant and positive influence on relationship marketing outcomes. Furthermore, research reveals that satisfaction, trust and commitment significantly and positively influenced CLV.Practical implicationsThose FFRs that seek to enhance CLV should build solid and sustainable bonds with their customers. This paper concludes by stating its implications, its limitations and the opportunities available for future research.Originality/valueThis study, which is unique in the Middle East, includes essential strategies for managing customer relationship that can be universally applied to improve customer benefits and maximise the performance of businesses.

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“…Thus, scholars distinguish between the RO valuation, which applies formal models to estimate RO value, and RO reasoning, which identifies RO value conceptually, applying logic and heuristics (Trigeorgis & Reuer, 2017). Real option theory is applied to many practical decision situations in many industries, such as construction (Ribeiro et al, 2020), energy (Gupta & Mosiño, 2020), finance (Méndez-Suárez & Crespo-Tejero, 2021), healthcare (Gunter McGrath and Nerkar, 2004) or tourism (Piñeiro-Chousa et al, 2021), and many more. Also, risky endeavors, such as internationalization, can be subject to real option argumentation (Belderbos et al, 2020;Hunt et al, 2021;Ioulianou et al, 2021).…”

Section: Background and Past Reviewsmentioning

confidence: 99%

Tackling uncertain future scenarios with real options: A review and research framework

Gorupec

Brehmer

Tiberius

et al. 2022

The Irish Journal of Management

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Real options are widely applied in strategic and operational decision-making, allowing for managerial flexibility in uncertain contexts. Increased scholarly interest has led to an extensive but fragmented research landscape. We aim to measure and systematize the research field quantitatively. To achieve this goal, we conduct bibliometric performance analyses and bibliographic coupling analyses with an in-depth content review. The results of the performance analyses show an increasing interest in real options since the beginning of the 2000s and identify the most influential journals and authors. The science mappings reveal six and seven research clusters over the last two decades. Based on an in-depth analysis of their themes, we develop a research framework comprising antecedents, application areas, internal and external contingencies, and uncertainty resolution through real option valuation or reasoning. We identify several gaps in that framework, which we propose to tackle in future research.

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Why do banks retain unprofitable customers? A customer lifetime value real options approach

Cited by 13 publications

References 31 publications

Customer Relationship Management in New Business Models

Customer Relationship Management in New Business Models

Customer lifetime value: the effect of relational benefits, brand experiences, quality, satisfaction, trust and commitment in the fast-food restaurants

Tackling uncertain future scenarios with real options: A review and research framework

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