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Working paper

Customer Lifetime Value and the Austrian School Tradition

Sloev I., Lianos G.
We examine the modern approach to customers as assets in its connection to the tradition of the Austrian Economic Theory. We revisit the concept of Customer Lifetime Value within a conceptual framework similar to a Misesian Evenly Rotating Economy. We argue that individual entrepreneurial action inside the market process plays a crucial role in determining the characteristics of customer assets. In our model of an Evenly Rotating Economy we show by means of a numerical example that a passive entrepreneurial attitude and a mechanistic application of the Customer Lifetime Value approach may result in destruction of Value of the Firm.