NPS Blog

Podcast: What Is a Customer Worth?

Peter FaderLarge companies tend to focus on traditional financial forecasts—earnings estimates, sales targets and so forth. After all, it’s how the market measures their value and whether they’re worthy of investment.

The intense pressures to meet these goals can cause some executives to make short-term cuts that can undermine their long-term strategies. Some would argue that we need new gauges of corporate strength. The Net Promoter Score is a very powerful measure, but so is another: customer lifetime value. This measure helps companies identify their most valuable customers and build those relationships.

Peter Fader, a marketing professor at the Wharton School of the University of Pennsylvania, returns to the Net Promoter System Podcast to discuss the importance of measuring customer lifetime value. He recently founded a company called Zodiac that specializes in estimating customer value.

You can listen to our discussion on iTunes, Stitcher or through the player below.

2 Responses to Podcast: What Is a Customer Worth?

  1. Loved this podcast, on a critically important subject. Peter and Rob had quite a debate, though they seem to agree on most things. One great question was why there is no GAAP-type standard for reporting on the financial value of a customer. It would be great to see Bain or some other respected body take the lead on the topic.

    • Thanks, Maurice. We love the idea of getting an accounting standards body like FASB to issue standards for customer lifetime value calculations reporting. Interestingly, many of the techniques that would be required are less uncertain than are approved methodologies for marking securities to market, calculating the value of options, or accounting for the value of multi-year contracts. We’ve been in discussion with some members of the accounting profession, but perhaps it is time to mount a more deliberate effort? Feel free to reach out if you think you’d like to contribute to the cause!