It looks very interesting and I’d be the first to agree that smarter customer-related KPIs are in order.

One thing, that I’ve found through research though is that there is much confusion between CP, CLV and a third term Customer Equity in the academic literature, as we have described in “Accounting is from Mars, Marketing is from Venus” in the Journal of Marketing Management in Oct 2008.

You define CLV (as many do) as “the present value of the future cash-flows derived from the relationship with the customer” but this is not the only definition in practical use. We find that future cash flows are usually mixed up with future projected Customer Profts (all brought back to Present Value) as well as revenues being discounted back. Also, shouldn’t it be net cash flows from the relationship with the customer (i.e. net of incurred cash costs to serve the customer)? This brings in trouble with depreciation and other non-cash items. All in all it makes for a complicated debate.

I’m not being critical of your view, merely pointing out that an apparently simple concept masks many complex issues, as we outline in our paper. I can mail a copy to you if you like or even write up a summary.

Regards
Robin Gleaves, Visiting Fellow, Manchester Business School