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V. Kumar, R. Venkatesan and B. Rajan

References Donkers, B., Peter C. Verhoef and M.G. de Jong (2007), “Modeling CLV: A Test of Competing Models in the Insurance Industry”, Quantitative Marketing and Economics, Vol. 5, No. 2. (June 2007), pp. 163 - 190. Kumar, V., Denish Shah and Rajkumar Venkatesan (2006), “Managing Retailer Profitability - One Customer at a Time!” Journal of Retailing, 82(4), pp. 277 - 294. Kumar, V., Rajkumar Venkatesan, Tim Bohling and Denise Beckmann (2008), “The Power of CLV: Managing Customer Lifetime Value at IBM

Open access

Thorsten Wiesel, Bernd Skiera and Julián Villanueva

References Berger, P.D. and N.L. Nasr (1998), “Customer Lifetime Value: Marketing Models and Applications,“ Journal of Interactive Marketing, 12, pp. 17 - 30. Blattberg, R.C. and J. Deighton (1996), “Managing Marketing by the Customer Equity Test,“ Harvard Business Review, 74, pp. 136 - 144. Gupta, S. and D.R. Lehmann (2003), “Customer As Assets,“ Journal of Interactive Marketing, 17, pp. 9 - 24. International Accounting Standards Board (2004), “Framework for the Preparation and Presentation of

Open access

Philipp Schmitt, Bernd Skiera and Christophe Van den Bulte


Marketers increasingly use word of mouth to promote products or acquire new customers. But is such companystimulated WOM effective? Are customers who are referred by other customers really worth the effort? A recent study clearly says “yes”. In a study of almost 10,000 accounts at a German bank, the referred customers turned out to be 25 % more profi table than customers acquired by other means. Over a 33-month period, they generated higher profi t margins, were more loyal and showed a higher customer lifetime value. The difference in lifetime value between referred and non-referred customers was most pronounced among younger people and among retail (as opposed to private banking) customers. The reward of € 25 per acquired customer clearly paid off. Given the average difference in customer lifetime value of € 40, this amount implied a return on investment (ROI) of roughly 60 % over a six-year period. The encouraging results of this study, however, do not imply that “viral-for-hire” works in each and every case. Referral programs would be most beneficial for products and services that customers might not appreciate immediately. Products and services that imply some kind of risk would also benefit to a more than average degree from referrals because prospects are likely to feel more confi dent when a trusted person has positive experiences. Companies should consider carefully which prospects to target with referral programs and how large a referral fee to provide.

Open access

Karl Farmer and Birgit Bednar-Friedl

-157 Schaefer M. B. (1954) Some aspects of the dynamics of populations important to the management of commercial marine fisheries, Bulletin of Inter-American Tropical Tuna Commission 1, 25-56 Shell K. (1971) Notes on the economics of infinity, Journal of Political Economy 79, 1002-1012 Smith V. L. (1968) Economics of production from natural resources, American Economic Review 58, 409-432 Valente S. (2008) Intergenerational transfers, lifetime welfare, and resource preservation, Environment and Development Economics, 13 (1), 53-78

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Shamsul Huq Bin Shahriar, Sayed Arafat, Md. Fayjullah Khan and Mahbub Ul Islam

-428. [71] Robbins, S.P. (2001). Organizational Behaviour - Concepts Controversies & Applications. USA: Prentice Hall International Inc. [72] Rust, R.T., Lemon, K.N. and Zeithaml, V.A. (2004). Return on marketing: using customer equity to focus marketing strategy, Journal of Marketing, 68(1), pp. 109-27. [73] Rust, R.T., Zeithaml, V.A. and Lemon, K.N. (2000). Driving Customer Equity. How Customer Lifetime Value is Reshaping Corporate Strategy, New York, NY: The Free Press. [74] Schoefer, K. and Diamantopoulos, A. (2008). The