Customer flow: evaluating the long-term impact of marketing on value creation
Purpose: The purpose of this paper is to construct a system of indicators that will allow firms to evaluate the long-term results of their marketing activities along the value chain. Design/methodology/approach: The paper integrates the concepts of network relationships, value chain management, and customer lifetime value (CLV). The authors use participative inquiry and case studies to validate and clarify the model. Findings: The authors develop the customer flow conceptual model and propose a sequence of actions to translate it into measures and indicators that will allow firms to understand their role in the creation of sustainable value. Using this model, the authors conduct comparative analyses of the acquisition and retention strategies of a multinational firm in the European and Russian markets. The results provide a crucial justification for new directions in future long-term marketing activities. Research limitations/implications: The model is validated in two cases in different industries. Further research is required to examine the implementation of suggested tools in different industries. Practical implications: The model was simplified for a practical application and indicators for future monitoring process and customer flow management were developed. Originality/value: The authors developed the concept of customer flow to assess the long-term results of marketing activities and to emphasize the difference between managing new and existing customers. New performance metrics are proposed based on customer flow and its structural characteristics. This allowed comparing of acquisition and retention strategies of the same company in different markets and reveals the crucial differences between the marketing strategies prevailing in Russia and those in Europe. The authors have demonstrated how the concept may help firms to develop and implement successful strategies.