Valuing customer relationships: Using the capital asset pricing model (CAPM) to incorporate relationship risk

Abstract

The paper argues the necessity to consider risk and return when valuing customer relationships or developing relationship strategies. It discusses how risk might be calculated and proposes the use of the Capital Asset Pricing Model. The model's adaptation to customer contexts and implications for strategy are discussed. Differences between relational exchange in business markets and transactional exchange on investment markets are highlighted. In the light of these, the model should guide rather than prescribe strategic direction.ABSTRACT FROM AUTHOR