Understanding customer-based corporate valuation with Daniel McCarthy

In marketing - 'the most important acronym to pay attention to is ROI.'

Understanding customer-based corporate valuation with Daniel McCarthy

The future value of a business depends on that business' relationship with its customers and how profitable those customers are.

This statement may appear to be very obvious, but it is weirdly a very simple point that is universally overlooked.

Traditionally when investors analyse the value of a company, and whether or not to invest money in it - they would make that determination based on financial metrics, which are historical. Those numbers however tell you nothing about the future potential of the business. They don't indicate how good the relationship between the business and its customers is.

Daniel McCarthy and Peter Fader developed a solution to this challenge, which they called customer-based corporate valuation (CBCV) - where the customer is the basic unit of analysis.

Put simply CBCV links customer economics to corporate value.

To get a better handle on CBCV I had a chat to Daniel McCarthy which has been recorded for your listening pleasure as a podcast.

Daniel is an Assistant Professor of Marketing at Emory University’s Goizueta School of Business and the co-founder of Theta - a predictive customer value analytics company that leverages the Customer-Based Corporate Valuation® (CBCV) and Customer Lifetime Value (CLV) frameworks to provide unrivalled and actionable insights into customer behaviours as well as overall company health and how it can be enhanced.


More:

How to Value a Company by Analyzing Its Customers
Customer-based company valuation, or CBCV, is a method that uses customer metrics to assess a firm’s underlying value. The premise behind CBCV is simple. Most financial-valuation methods require quarterly financial projections, most notably of revenue. Recognizing that every dollar of revenue comes…
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