Customer lifetime network value: customer valuation in the context of network effects

  • Miriam Däs
  • Julia Klier
  • Mathias Klier
  • Georg Lindner
  • Lea Thiel
Research Paper

Abstract

Nowadays customers are increasingly connected and extensively interact with each other using technology-enabled media like online social networks. Hence, customers are frequently exposed to social influence when making purchase decisions. However, established approaches for customer valuation mostly neglect network effects based on social influence. This leads to a misallocation of resources. Following a design-oriented approach, this paper develops a model for customer valuation referred to as the customer lifetime network value (CLNV) incorporating an integrated network perspective. By considering the customers’ net contribution to the network, the CLNV reallocates values between customers based on social influence. Inspired by common prestige- and eigenvector-related centrality measures it incorporates social influence among all degrees of separation acknowledging its viral spread. Using a real-world dataset, we demonstrate the practicable applicability of the CLNV to determine individual customers’ value.

Keywords

Customer valuation Customer lifetime value Social influence Network effects 

JEL classification

M10 

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Copyright information

© Institute of Applied Informatics at University of Leipzig 2017

Authors and Affiliations

  • Miriam Däs
    • 1
  • Julia Klier
    • 1
  • Mathias Klier
    • 2
  • Georg Lindner
    • 1
  • Lea Thiel
    • 1
  1. 1.University of RegensburgRegensburgGermany
  2. 2.University of UlmUlmGermany

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