Large companies live and die by traditional financial forecasts—earnings estimates, sales targets and so forth. After all, it’s how the market measures their value and whether they’re worthy of investment.
The intense pressures to meet these goals can cause some executives to make short-term cuts that can undermine their long-term strategies. Some would argue that we need new gauges of corporate strength. The Net Promoter Score is a very powerful measure, but so is another: customer lifetime value. This measure helps companies identify their most valuable customers and build those relationships.
Peter Fader, a marketing professor at the Wharton School of the University of Pennsylvania, returns to the Net Promoter System Podcast to discuss the importance of measuring customer lifetime value. He recently founded a company called Zodiac that specializes in estimating customer value.