Keywords
Relationship
Recommendation
Customer performance.
How to Cite
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.
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