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Customer Relationship
Management
A Databased Approach
V. Kumar
Werner J. Reinartz
Instructor’s Presentation Slides
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Chapter Six
Customer Value Metrics:
Concepts and Practices
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Topics Discussed
•
Popular Customer-based Value Metrics
•
Strategic Customer-based Value Metrics
•
Popular Customer Selection Strategies
•
Lift charts
•
Cases
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Customer Based Value Metrics
Customer
based

Primary market research
Evaluation:
Critical measure for customer-centric organizations based on the
assumption
that a large wallet size indicates more revenues and profits
Example:
A consumer might spend an average of $400 every month on groceries
across the supermarkets she shops at. Her size-of-wallet is $400
∑
=
J
j 1
∑
=
J
j 1
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•
SCR (%) of firm or brand in category = Vij / Vij
j = firm, V = purchase volume, i = those customers who buy brand
= summation of volume purchased by all the I customers from a firm j,
= summation of volume purchased by all I customers from all j firms
Information source:
Numerator: volumetric sales of the focal firm - from internal records
Denominator: total volumetric purchases of the focal firm’s buyer base- through market and
distribution panels, or primary market research (surveys) and extrapolated to the entire buyer base
Evaluation:
Accepted measure of customer loyalty for FMCG categories, controls for the total volume of
segments/individuals category requirements; however, does not indicate if a high SCR customer will