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2018/2019  KAN-CCUSO2003U  Customer and Firm Profitability

English Title
Customer and Firm Profitability

Course information

Language English
Course ECTS 7.5 ECTS
Type Mandatory
Level Full Degree Master
Duration One Semester
Start time of the course Spring
Timetable Course schedule will be posted at calendar.cbs.dk
Study board
Study Board for MSc in Economics and Business Administration
Course coordinator
  • Pall Rihkardsson - Department of Accounting (AA)
Main academic disciplines
  • Finance
  • Marketing
  • Accounting
Teaching methods
  • Blended learning
Last updated on 17-12-2018

Relevant links

Learning objectives
  • Explain how financial value is created in firms and how financial value creation and profitability can be measured at the firm-, market- and customer-level respectively
  • Select, explain and apply relevant customer-based metrics and models covered in the course to analyze financial value creation in a firm
  • Analyze and describe how sales/marketing managers and business developers could use relevant theories and models covered in the course to manage the financial value of customer relationships in a specific case setting
  • Present a clear and coherent argument for your selection of key theories and models and follow academic conventions in your oral presentation
Customer and Firm Profitability:
Exam ECTS 7,5
Examination form Oral exam
Individual or group exam Individual exam
Duration 20 min. per student, including examiners' discussion of grade, and informing plus explaining the grade
Preparation time With the listed preparation time: 20 Minutes
Grading scale 7-step scale
Examiner(s) Internal examiner and second internal examiner
Exam period Summer
Aids Open book: all written and electronic aids
The student is allowed to bring to the preparation room: Simple writing and drawing utensils, laptop/tablet as a reference book (NB: there are no electric outlets available), any calculator, books including translation dictionaries, compendiums, notes. PLEASE NOTE: Students are not allowed to communicate with others during the preparation time.
Make-up exam/re-exam
Same examination form as the ordinary exam
Course content and structure

Aim of the course
Students will achieve a solid understanding of costs, profitability and value creation tools and techniques that provide a transparent, fact-based financial foundation for strategic sales decisions with the purpose of driving business performance in terms of customer equity, customer profitability, and customer lifetime value (CLV). This general financial understanding is a key asset to sales/marketing managers and business developers alike as they are increasingly expected to identify the financial potential of sales development strategies. Students will also learn how to manage key accounts strategically and understand that every customer has different expectations and needs that must be translated into how the sales force engages with the customers.

The course is divided into three main parts:

The first part establishes how financial value is created in firms. The students are introduced to key concepts such as shareholder value, cost management, strategic market profitability and customer profitability analysis.

In the second part of the course students will be exposed to some long term measures of financial value creation at customer level such as customer lifetime value (CLV) and customer satisfaction and the use of customer analytics with relation to these metrics will be demonstrated.

The final part of the course deals with the management of customer accounts for value. Generally, the insights generated by analyzing the financial value of customer accounts must be converted into actionable customer management strategies. The students will have the opportunity to work with this across the customer base as a whole as well as for selected key accounts.

Description of the teaching methods
This course is delivered in a blended learning format. That is, we combine online material and lectures with in-class discussions and workshops. A high level of interaction is expected from the students. In class we will deploy a mix of lectures, discussions and interactive case studies. Moreover, one or two guest speakers will be invited to share their perspectives from practice
Feedback during the teaching period
Part of ongoing discussions in class.
Student workload
Teaching 33 hours
Preparation 123 hours
Exam 50 hours
Expected literature

Research paper based (Indicative literature - more literature will be announced upon enrollment):


  • Berger, P.D. & N.I. Nasr (1998): “Customer Lifetime Value: Marketing Models and Applications”, Journal of Interactive Marketing, 12 (Winter).
  • Blattberg R.C. & J. Deighton (1996): “Manage Marketing by the Customer Equity Test”, Harvard Business Review (July-August).
  • Gupta, S., Lehmann, D.R., Stuart, J.A. (2004): “Valuing Customers.” Journal of Marketing Research, 41 (February), 7-18.
  • Gupta S. et al. (2006): “Modeling Customer Lifetime Value.” Journal of Service Research. 9.2 (November), 139-155.
  • Hanssens, D.M., D. Thorpe & C. Finkbeiner (2008): “Marketing When Customer Equity Matters.” Harvard Business Review (May).
  • Harris, R.S. (1997): “Value Creation, Net Present Value and Economic Profit”, Darden Business Publishing.
  • Holm, M., V. Kumar, and C. Rohde. (2012): “Measuring Customer Profitability in Complex Environments: An Interdisciplinary Contingency Framework.” Journal of the Academy of Marketing Science 40 (3): 387-401.
  • IMA (2010): “Customer Profitability Management.” Statement on Management Accounting Business Performance Management.
  • Kaplan, R.S., Anderson, S.R. (2004):”Time-Driven Activity-Based Costing.” Harvard Business Review, November, 131-138.
  • Kumar, V., Petersen, A., Leone, R.P. (2007): ”How Valuable Is Word of Mouth?” Harvard Business Review.
  • Kumar, V., Shah, D. (2009): “Expanding the Role of Marketing: From Customer Equity to Market Capitalization.” Journal of Marketing 73, 119-136.
  • Kumar, V. et al. (2008): “The Power of CLV: Managing Customer Lifetime Value at IBM”. Marketing Science 27(4), 585-599.
  • Kumar, V. (2018): “A Theory of Customer Valuation: Concepts, Metrics, Strategy, and Implementation.” Journal of Marketing82(1), 1-19.
  • Nenonen, S. & Storbacka, K. (2008): “Customer Roles in Shareholder Value Creation – An Empirical Investigation of Customer Asset Management Strategies.” Working Paper.
  • Rust, R. T., K. N. Lemon, and V. A. Zeithaml. (2004): "Return on marketing: Using customer equity to focus marketing strategy." Journal of marketing 68.
  • Ryals, L. (2005): “Making Customer Relationship Management Work: The Measurement and Profitable Management of Customer Relationships.” Journal of Marketing 69, 252-261.
  • Ryals, L. (2007): “Profitable relationships with key customers: how suppliers manage pricing and customer risk.” Journal of Strategic Marketing 14(2), 101-113.
  • Venkatesan R., Kumar V. (2004): “A Customer Lifetime Value Framework for Customer Selection and Resource Allocation Strategy.” Journal of Marketing 68(4), 106-125.
Last updated on 17-12-2018