1/Working paper thread! “Assessing the Role of Customer Equity in Corporate Valuation”. TLDR: customers deserve a role in valuation, CE was prescient but ~no uptake outside marketing. We show why and propose CBCV as solution. bit.ly/2tXVOth (LI: bit.ly/2QQFVxL)
2/Traditional financial data is getting less relevant while customer data is getting more relevant. Investors have a blind spot and insights through customer data could be the solution. I think this is our field’s biggest opportunity to expand the role of marketing by far.
3/Customer equity (CE) has been far and away the most popular concept linking customer activity to valuation. CE is, loosely, the sum of the CLV’s of a company’s customers. There has been a flood of articles and books written about it since Blattberg and Deighton’s seminal work. 
4/While popular within marketing academia, it has gotten virtually no attention/adoption elsewhere – by investors, executives, financial media, valuation textbooks, valuation classes, …
5/CE’s lack of uptake stems from 3 issues. (1) Substantial disagreement over how CE is defined among marketing academics. (2) Inconsistency between CE and SHV, making CE not usable for absolute or relative valuation. (3) Severe implementation issues for financial professionals.
6/Customer-based corporate valuation (CBCV) fixes all of these issues by augmenting traditional corporate valuation methods, forecasting period-by-period revenue and CAC using best-in-class marketing science models off customer data.
7/We are already seeing promising signs of broad-based adoption of CBCV – by investors, financial media, sell-side analysts, regulators, and corporate valuation classes – even though our very first CBCV paper was published only 3 years ago.
8/To broaden adoption for public companies, we need to push for more disclosure of informative, objective, historical customer-related data such as the C3, not measures such as CLV and CE, which are very easy to game. More here: bit.ly/2TjxzAm. Join us!
9/Adoption of CBCV will make CE more popular, not less. CE, CLV, and the retention curve are all useful and diagnostic in their own right. These concepts are friends, not enemies.
10/When this framework becomes a regular part of valuation, I predict that CMOs will get a lot more powerful but a lot more accountable. Also, CMOs will sound more like CFOs, and CFOs more like CMOs. This is what we’d expect after successfully challenging marketing’s boundaries.
11/As marketers, let’s not waste this amazing opportunity for our field. As a first step, we must accept that the fact that the status quo clearly isn’t working. While I think CBCV is the solution, I hope this helps kick off a broader discussion of where to go from here.
