Linking Customer Journey to Customer Lifetime Value - Towards a Deeper Understanding of Customer Valuation

Abstract

Marketing has developed over time towards a comprehensive approach to relationship marketing and customer experience. Consequently, there has also been a common emphasis on the dual creation of firm and customer value since the late 1990s. Following the discussion and targeting an economic value added (EVA), the concept of the customer lifetime value (CLV) has emerged as one of the critical metrics to manage customer relationships and customer equity in many companies. Customer relationships are seen as the firm's assets; therefore, various models for the valuation of customer relationships have been developed to estimate their economic value added. However, still, the application of these models in companies is rare. In this paper, we contribute to the higher applicability of a customer valuation with a view to the emerging applications of customer journey mapping in recent years. Our approach is based on the principles of calculating an Economic Value Added and on the target-oriented modelling of costs and revenueswhich means residual incomes, not cash flowsduring the customer relationship and integrating the concept of customer journey mapping.