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How valuable is word of mouth? by V. Kumar, J. Andrew Petersen, and Robert P. Leone

By: Kumar, V.
Contributor(s): Petersen, J. Andrew | Leone, Robert P.
Series: Harvard Business Review.Publisher: , USA 2007Description: 139-146.Subject(s): VALUATIONS | CONSUMERS | DISCOUNTED CASH FLOW | MarketingOnline resources: Click here to access online Summary: Uses discounted cash flow calculations to determine how much of each customer's value stems from purchases (lifetime value) and how much from referrals (referral value). Uses sales data and analysis to segment customers into four groups: those that buy a lot but are poor marketers (Affluents); those that don't buy much but are very strong salespeople for a firm (Advocates); those that do both well (Champions); and those that do neither well (Misers). Seeks to demonstrate the effectiveness of this segmentation approach.
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Uses discounted cash flow calculations to determine how much of each customer's value stems from purchases (lifetime value) and how much from referrals (referral value). Uses sales data and analysis to segment customers into four groups: those that buy a lot but are poor marketers (Affluents); those that don't buy much but are very strong salespeople for a firm (Advocates); those that do both well (Champions); and those that do neither well (Misers). Seeks to demonstrate the effectiveness of this segmentation approach.

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