This Article Full Text (PDF) Full Text (OnlineFirst PDF) References Alert me when this article is cited Alert me if a correction is posted Citation Map Services Email this article to a friend Similar articles in this journal Alert me to new issues of the journal Add to Saved Citations Download to citation manager Request Permissions Request Reprints Add to My Marked Citations Citing Articles Citing Articles via HighWire Citing Articles via Google Scholar Citing Articles via Scopus Google Scholar Articles by Hogan, J. E. Articles by Libai, B. Search for Related Content Social Bookmarking                         What's this?

What Is the True Value of a Lost Customer?

Katherine N. Lemon

Boston College

Barak Libai

Technion-Israel Institute of Technology

Customer profitability models have evolved into an important strategic tool for marketers in recent years. Traditional customer profitability models implicitly assume that customers can be valued in isolation from one another and that social interactions can be ignored. The authors show that these conventional models may be inappropriate for markets involving new products or services because they fail to account for the social effects (e.g., word of mouth and imitation) that can influence future customer acquisitions. They show how the impact of a lost customer on the profitability of the firm depends on (a) whether the customer defects to a competing firm or disadopts the technology altogether and (b) when the customer disadopts the technology—distinctions often overlooked in conventional models. The results demonstrate how the value of a lost customer changes throughout the product life cycle, showing that the loss of an early adopter costs the firm much more than the loss of a later adopter.

Key Words: customer profitability • customer retention • new technology • disadoption

Journal of Service Research, Vol. 5, No. 3, 196-208 (2003)
DOI: 10.1177/1094670502238915


CiteULike    Complore    Connotea    Del.icio.us    Digg    Reddit    Technorati    Twitter    What's this?

This article has been cited by other articles:

				K. Karande, V. P. Magnini, and L. Tam Recovery Voice and Satisfaction After Service Failure: An Experimental Investigation of Mediating and Moderating Factors Journal of Service Research, November 1, 2007; 10(2): 187 - 203. [Abstract] [PDF]

				S. Gupta, D. Hanssens, B. Hardie, W. Kahn, V. Kumar, N. Lin, N. Ravishanker, and S. Sriram Modeling Customer Lifetime Value Journal of Service Research, November 1, 2006; 9(2): 139 - 155. [Abstract] [PDF]

				P. D. Berger, N. Eechambadi, M. George, D. R. Lehmann, R. Rizley, and R. Venkatesan From Customer Lifetime Value to Shareholder Value: Theory, Empirical Evidence, and Issues for Future Research Journal of Service Research, November 1, 2006; 9(2): 156 - 167. [Abstract] [PDF]

				V. Kumar and J. A. Petersen Using a Customer-Level Marketing Strategy to Enhance Firm Performance: A Review of Theoretical and Empirical Evidence Journal of the Academy of Marketing Science, October 1, 2005; 33(4): 504 - 519. [Abstract] [PDF]

				F. v. Wangenheim Postswitching Negative Word of Mouth Journal of Service Research, August 1, 2005; 8(1): 67 - 78. [Abstract] [PDF]

				T. Perkins-Munn, L. Aksoy, T. L. Keiningham, and D. Estrin Actual Purchase as a Proxy for Share of Wallet Journal of Service Research, February 1, 2005; 7(3): 245 - 256. [Abstract] [PDF]