• 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

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.
 

Content
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.

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.