Because managers expect these relationships
to be enduring, it is anticipated that the seller will
capture as much of the buyer’s business as possible for
as long a time as possible. As a result, the concept of
Consumer Lifetime Value (CLV) has been developed
as a way of determining the monetary value of the
buyer’s purchases to the seller over time. Current
research on CLV suggests that many companies are
using these concepts to determine those customers to
select for their CRM programs and how much to spend
on these programs for each customer. CLV models can
be used to project a revenue stream for each customer
and then contribute to a number of marketing
decisions, including customer acquisition programs.
Articles by Berger and Nasr (1998), Mulhern (1999),
and Jain and Singh (2002) provide summaries of the
philosophies behind CLV models and the research that
has been conducted in this area.