Profitable

Customer Engagement

Concepts, Metrics, and Strategies

V. Kumar

t>SAGE I % I Business Bool» www. sagepubl ¡cations. com Los Angeles • London • New Delhi • Singapore • Washington DC

CONTENTS

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List of Illustrations xi List of Abbreviations xv Foreword: From a Thought Leader by David J. Reibstein xvii Foreword: From a Business Leader by J. Patrick Bewley xix Preface xxi Acknowledgments xxiii

1. Introduction to Customer Engagement 1 Engaging with Your Customers: Marketplace Evidence 4 Understanding Profitable Customer Engagement 7 Why Value Customer Engagement? 9

2. Metrics for Engaging Customers 17 A Firm's Approach to Customer Engagement 17 Conceptualizing CEV: An Integrated Framework 20 Customer Brand Value (CBV) 25 Customer Lifetime Value (CLV) 28 Customer Referral Value (CRV) 31 Business Reference Value (BRV) 35 Customer Influence Value (CIV) 35 Customer Knowledge Value (CKV) 38 How Does It Help Organizations? 42 Conclusion 43

3. Brand: "Is That What You Think of Me?" 46 Connecting Brands with Customers 48 Need to Measure Brand Value 51 Aggregate versus Individual Brand Value 54

vi¡¡ PROFITABLE CUSTOMER ENGAGEMENT

The CBV Framework 54 Measuring CBV 62 Maximizing CBV 63 Conclusion 63

4. Valuing Customer Contributions: The Future Looks Green! 66 Introduction: Why Measure Customer Value? 66 Traditional Measures of Customer Value: Backward-looking

Metrics 67 Defining CLV: The Forward-looking Metric 70 Measuring CLV 72 Drivers of CLV 77 Maximizing CLV to Ensure Profitable Customer Engagement 78 Future of CLV 109 Looking Beyond CLV 110

5. Linking Brand Value to Customer Value 113 How to Link the Brand Value to Customer Value 113 The Role of Brand Communication in Linking Brand and

Customer Value 115 Strategic Implementation of Managing Brands and Customers 116 Conclusion 130

6. Customer Referrals 132 Introduction: Valuing the Word That Goes Around 132 Conceptual Background 135 Defining CRV 147 Measuring CRV 147 Maximizing CRV 152 Linking CRV and CLV 154 Linking CBV and CRV 168 The Value of References in the B2B Setting 171 Measuring BRV 172 Drivers of BRV 177 Maximizing BRV 182 Linking BRV and CBV 186 From Referrals to Influence 189

Contents ix

7. Customer Influence Value: Really! Where Did You Hear That? 191 Introduction: Social Media 191 Social Media Landscape 192 Why Social Media Can Be Powerful 193 Successes and Failures in Marketing through Social Media 196 Defining Customer Influence Effect (CIE) and Customer

Influence Value (CIV) 199 A Seven-step Framework for Creating Successful Social Media

Marketing Campaigns 199 Implementation of the Seven-step Framework 203 Implementation of the Seven-step Process in HokeyPokey 206 Measuring CIV: Calculating the Effect and Value of Social

Media Influence 212 The Campaign Results and Implications 216 Computation of CIV 218 Implications of CIV for Social Media Marketers 218 Encouraging and Maximizing CIV 221 Avoiding the Pitfalls in Social Coupon Launches 227 Interrelationships 234 Social Media Marketing (SMM): Version 2.0 240 A Sample Framework for Implementation 241

8. Please Help Us Help You... 246 Introduction: The Value of Customer Knowledge 246 Defining Customer Knowledge Value (CKV) 251 Measuring CKV 251 CKV Measurement Strategy 255 Impact of Social Media in CKV 264 Encouraging and Maximizing CKV 265 Applying CKV in Business 267 Interrelationships 269 Conclusion 275

9. Managing Customers in a Multi-dimensional World 278 Managing the CEV Framework 279 Organizational Challenges 288 Database Management 291

X PROFITABLE CUSTOMER ENGAGEMENT

The Future of Customer Engagement 294 Conclusion 297

Glossary 299 Index 30 4 About the Author 312