Handbook of Research on Customer Equity in Marketing
Show Less

Handbook of Research on Customer Equity in Marketing

Edited by V. Kumar and Denish Shah

Customer equity has emerged as the most important metric to manage firm performance. This Handbook covers a broad range of strategic and tactical issues related to defining, measuring, managing, and implementing the customer equity metric for maximizing firm performance. Drawing upon the wisdom of a global pool of leading scholars, the book serves as a comprehensive and authoritative guide on customer lifetime value and customer equity for marketing researchers, practitioners, and students worldwide.
Buy Book in Print
Show Summary Details
You do not have access to this content

Chapter 9: The power of customer referrals

Robert P. Leone and Angeliki Christodoulopoulou


A customer’s contribution to the firm is not limited only to the profits generated from his or her purchase behavior, it also encompasses the benefits that result from his or her referral behavior. Research has clearly shown that a customer’s referrals can be quite valuable to a firm since they can generate new customers in various situations, including during new-product diffusion (Mahajan, Muller, and Bass, 1995). Word-of-mouth (WOM) can also be quite important, since even when consumers are making general purchase decisions they often seek opinions from others who have specific product or market knowledge (Feick and Price, 1987). Furthermore, they tend to trust other consumers considerably more than they trust marketer-generated information. For example, Nielsen reports that 92 percent of consumers say who they trust recommendations from people they know, compared to just 47 percent who trust TV advertising. Moreover, 77 percent of consumers are more likely to buy a new product that was introduced to them through word-of-mouth originating from friends or family. Given the trust and importance that consumers place on product and service information provided by their social networks, many firms have now incorporated a referral program in their customer acquisition strategy.

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.

Further information

or login to access all content.