Comprehensive approach in measuring customer value in B2B markets from the supplier’s perspective

The primary goal of every company should be to acquire and retain customers. However, a problem that companies face is that not all customers have the same value for them. If a company acquires wrong customers they will lose money not only due to acquiring but also on servicing those customers. This is particularly a problem in business-to-business markets, where substantial sales and marketing resources are allocated to acquire and service few individual customers (Bowman and Narayandas 2004).To avoid this, companies measure the value of every prospect so that they could distinguish between “right” and “wrong” customers. (e.g. Gupta and Lehmann 2003). One of the metrics commonly used for measuring customer value for the supplier is customer lifetime value (CLV) which is the “the sum of cumulated cash flows over a customer’s entire lifetime with the company” (Kumar and Bharath 2009). The problem is that this approach may not fully reflect the customer’s value to the selling firm. In addition to this direct measurement of customer value, there are several indirect ways how buyers could deliver value to their supplier, such as advocacy (East et al. 2005), learning (Keaveney 1995), innovation (Thomke and von Hippel 2002), network potential and customers’ reputation. Within this paper literature on both aspects is reviewed and avenues for further investigation on customer lifetime value as a whole and on indirect measures, particularly on customer referral value (WOM, advocacy) and on customer reputation value are proposed.