Abstract
Today, people are increasingly connected and
extensively interact with each other using
technology-enabled media. Hence, customer
s are more frequently exposed to social
influence of other customers when making
purchase decisions. However, established
approaches for customer valuat
ion most widely neglect network effects based on social
influence leading to a misallocation of resour
ces. ...
Abstract
Today, people are increasingly connected and
extensively interact with each other using
technology-enabled media. Hence, customer
s are more frequently exposed to social
influence of other customers when making
purchase decisions. However, established
approaches for customer valuat
ion most widely neglect network effects based on social
influence leading to a misallocation of resour
ces. Therefore, following a design-oriented
approach, this paper develops a model fo
r customer valuation referred to as the
customer lifetime network value (CLNV)
incorporating an integrated network
perspective. By considering the net networ
k contribution of customers, the CLNV
reallocates values between customers based
on social influence without changing the
overall network value, that is, a firm’s cust
omer equity. Using a real-world dataset of a
European online social network, we demonstrate and evaluate the applicability of the
CLNV. We show that the CLNV enables a
sound determination of both individual
customers’ value and firm’s customer eq
uity and supports thorough customer
segmentation.
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