The influence of customer value on word of mouth: a study of a financial services company in Brazil

Sandro Bonfim da Costa, Danny Pimentel Claro, Adriana Bruscato Bortoluzzo

Abstract


Purpose – Our study analyzes the non-linear effect of customer lifetime
value (CLV), which accounts for the revenue accumulated over the
lifetime of a customer relationship, calculated using a discount rate,
on customer referral value (CRV), which accounts for the value created
by customers converted to the firm.


Design/methodology/approach – We collected data from customers
of a financial institution that provides retirement plan products. A
random sample of 768 customers provided the full names of individuals
to whom they made a recommendation. After these names were elicited,
respondents and referrals were identified in the firm’s records, and we
calculated the CLV and CRV values.


Findings – The results show the existence of a U-shaped effect of
CLV on CRV, and a negative linear effect of CLV on recommendation
intention.


Originality/value – Our study contributes to the body of literature on
word of mouth by focusing on a product and business segment with
low perceived brand differentiation and low customer involvement.
We contribute to the marketing literature by showing a U-shape
relationship between CLV and word of mouth activity, represented
by CRV.


Keywords


Word of mouth; Relationship; Recommendation; Customer performance.



DOI: https://doi.org/10.7819/rbgn.v20i2.3798

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