Customer Profitability Assessment of the Research Paper

All of these factors are taken into account in the development of the research findings and validation or refuting of the hypotheses that form the basis of the methodology in the model.

Major Points of Analysis

The authors' ambitious research agenda looks to define how companies can attain greater share of wallet through more effective profitable lifetime duration strategies. Implicit in this analysis is the need to invest in customer relationships to nurture, defend and retain them over time and create reward programs that accelerate customer loyalty as well (Reinartz, Kumar, 2003). The authors also point to the issues of cost reduction of marketing expenses, divestment strategies and customer outsourcing as all being indicators of a company generating low share-of-wallet and low profits per customer over time (Reinartz, Kumar, 2003). As a result of these insights the article and its research puts forth a significantly different view of lifetime customer value than previous studies which tended to support more of a comprehensive spending approach rather than a targeted one (Campbell, Frei, 2010). This study centers more on how customer loyalty in non-contractual markets can be earned over time by paying attention demographic and income variables over marketing and promotion spending alone.This is useful advice for practitioners who believe they need to spend more to get more sales leads and activity.

Conclusion and Application of Theories

The explosive growth of Web 2.0 technologies (Bernoff, Li, 2008) has since changed the dynamics the authors speak of in this article and its accompanying research, in effect accelerating it. Social networks over time are revolutionizing how trust is created and communication, a key point the authors make (Reinartz, Kumar, 2003). Finally their article defines the critical issues of customer loyalty not from just the standpoint of marketing spend but from providing customers with what they need to continually do business and purchase how they choose to (Campbell, Frei, 2010). The analysis shows how critically important it is to stay up with customers' changing preferences in how they want to buy if lifetime customer value is to be achieved.

References

Bernoff, J., & Li, C.. (2008). Harnessing the Power of the Oh-So-Social Web. MIT Sloan Management Review, 49(3), 36-42.

Campbell, D., & Frei, F. (2010). Cost Structure, Customer Profitability, and Retention Implications of Self-Service Distribution Channels: Evidence from Customer Behavior in an Online Banking Channel. Management Science, 56(1), 4-24.

Reinartz, W.J., & Kumar,.....