In this short summary show, I look back on an interview with Assistant Professor of Marketing at Emory University, Dan McCarthy, about key marketing topics that loyalty marketers love, such as measuring the lifetime value of customers and predicting future spend.
In that interview, we also talked about his exciting new tool for investors and leadership teams – called Customer-Based Corporate Valuation.
This innovative framework offers a comprehensive approach to connecting the loyal behaviour of customers with the overall valuation of the firm! A huge leap forward for our industry.
Professor McCathy also shared his insights on the Pareto Principle as well as the consumer behaviour changes he saw emerging as a result of the pandemic.
1) Episode #64: Customer Based Corporate Valuation – Daniel McCarthy of Emory University
2) Daniel McCarthy is the assistant professor of marketing of Emory University
3) Article: How to Value a Company by Analyzing Its Customers, Harvard Business Review
PAULA: Welcome to Let’s Talk Loyalty, an industry podcast for Loyalty Marketing Professionals.
PAULA: I’m your host, Paula Thomas, and if you work in Loyalty Marketing, join me every week to learn the latest ideas from loyalty specialists around the world.
PAULA: This episode is brought to you by Collinson, worldwide leaders in loyalty, creating and orchestrating loyalty initiatives and programs for some of the world’s biggest brands in travel, retail and financial services.
PAULA: Doing it globally for over 30 years.
PAULA: Want to know more?
PAULA: Go to collinsongroup.com.
PAULA: Hello and welcome to episode 190 of Let’s Talk Loyalty, where I’m looking back at what I learned from Daniel McCarthy, the Assistant Professor of Marketing at Emory University in the United States.
PAULA: Among his many credentials, both academic and commercial, Dan is the co-author of a Harvard Business Review article published in late 2020, called.
PAULA: How to Value a Company by Analyzing Its Customers.
PAULA: So our conversation was all about a fascinating methodology he created called Customer-Based Corporate Valuation, or CBCV for short.
PAULA: This methodology is a way to value companies from the bottom up, predicting the future behavior of customers in a way that marketeers, business leaders and investors can all understand.
PAULA: Many of us in the loyalty industry have struggled to explain to accounting colleagues the reality that while the costs of our marketing are incurred in the short term, the benefits of course are only realized over the longer term.
PAULA: Putting a lifetime value on customers or predicting their future behavior certainly isn’t easy, especially for non-marketeers.
PAULA: So Dan’s framework offers a new and compelling way to quantify their value, combining key marketing metrics into one framework.
PAULA: One specific company we discussed was the Revolve Group, a high-end online fashion retailer in the US.
PAULA: We discussed specifically how CBCV looks at four behaviors of customers, combining the value of the acquisition, retention, ordering and spend.
PAULA: This is a great example of how investors could get a much clearer understanding of how well the company is doing.
PAULA: By understanding these combined behaviors in more depth than would normally be available.
PAULA: This type of insight from progressive brands like Revolve helps loyalty marketeers earn more visibility and respect both internally and externally.
PAULA: Dan explained that CBCV predicts how a customer base is likely to evolve.
PAULA: And it also creates a common language for marketeers and finance directors.
PAULA: We also talked about the pandemic and some of its early effects on consumer behavior.
PAULA: For example, the increasing adoption of online ordering and home delivery.
PAULA: Two examples were Blue Apron, which offers home meal kits, and also Wayfair, a retailer of home goods.
PAULA: Both of these companies enjoyed huge short-term growth during COVID lockdown.
PAULA: And Dan’s team were carefully watching the insights on customer acquisition, ordering and spend, in order to assess their long-term viability.
PAULA: For me, I know I certainly spent more money in new categories when Dubai was in lockdown.
PAULA: So I guess our key question in the industry is which of these behaviours will continue as the pandemic starts to subside, and how those companies will be valued in the new normal post-pandemic.
PAULA: The last topic I wanted to learn more about was Dan’s insights on the famous Pareto Principle, where we’re often taught the 80-20 rule, where 20% of your customers can make up 80% of your sales.
PAULA: Dan said that he thinks this has probably shifted to perhaps more of a 70-30 split.
PAULA: But regardless of the percentages, the principle does definitely hold true.
PAULA: I loved discussing these academic insights with Dan, as a way to stay up to date on the newest thinking, and this new way to measure loyalty, and particularly its impact on corporate valuation.
PAULA: So I really do encourage you to listen to the full interview with Professor Dan McCarthy.
PAULA: You can find it easily at letstalkloyalty.com forward slash 64.
PAULA: And lastly, I invite you to join me tomorrow for the first time for a short bonus episode of Let’s Talk Loyalty, with some exciting announcements.
PAULA: And then again on Thursday, when I’m talking with Tom Peace, Managing Director of the Loyalty People in the UK.
PAULA: Have a great day, guys, and thanks for listening.
PAULA: This show is sponsored by The Wise Marketeer, the world’s most popular source of loyalty marketing news, insights and research.
PAULA: The Wise Marketeer also offers loyalty marketing training through its Loyalty Academy, which has already certified over 245 executives in 27 countries as certified loyalty marketing professionals.
PAULA: For more information, check out thewisemarketeer.com and loyaltyacademy.org.
PAULA: Thank you so much for listening to this episode of Let’s Talk Loyalty.
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