MANAGERIAL ACCOUNTING: MODELING CUSTOMER LIFETIME VALUE - AN APPLICATION IN THE TELECOMMUNICATION INDUSTRY

Customer lifetime value (CLV) is both a concept and a measure. Atits core, CLV, is about optimizing each interaction andconversation in order to create an engaged customerrelationship which drives customer retention, repeat purchases,customer referrals, reduced support costs, and possibly even pricepremiums. The aim of this article is to help the management team tocope with the use of customer lifetime value as a decent frameworkthat bridges the gap between the various organizational functions(particularly marketing and finance), offers a common language, soThe functions collectively can align on a strategy and make moreeffective decisions regarding investment and customer treatment.Therefore, how to measure and manage customer lifetime value fordetermining the likely future profit from the customer is veryimportant because the customer is always looking for better andcheaper products and services. Hence, in a broader sense, the objectiveof this article is to develop a concept of customer lifetime value in thetelecommunication industry, in particular in cellular telephony and todemonstrate business uses of CLV for the decision-making process.