Connected customer lifetime value: The impact of social media

Abstract

In this paper, we extend the general definition of Customer Lifetime Value (CLV) to include the value of influence associated with a consumer's network or connections. We introduce Connected Customer Lifetime Value (CCLV) as the present value of the net contribution associated with purchases made by a customer, plus the present value of the net contribution made by other customers due to the influence of that customer. We highlight social media engagement as an important process associated with that influence, and propose Customer Social Media Value (CSMV) to represent the value derived through said media engagement. Examples to illustrate CSMV and CCLV are provided. © 2011 MACMILLAN PUBLISHERS LTD.