Faculty of Economics and Business Administration Publications Database

My Customers are Better than Yours! On Customer Equity Reporting

Wiesel, Thorsten
Villanueva, Julian
Volume: 2
Number: 1
Pages: 43 - 53
ISSN-Print: 1865-5866
Link External Source: Online Version
Year: 2010
Keywords: Customer Management; Customer Equity; Customer Equity Statement; Customer Equity Flow Statement

Managers and investors need information about the performance and future prospects of a firm. If information is relevant in steering a business, it is also relevant for its investors’ investment decisions. Recent initiatives demand information that supplements and complements a firm’s financial statements to bridge the gap between financial statement capabilities and financial reporting objectives. Firms that aim to increase the value of their customer base should manage their business by future-oriented customer metrics. They should also report this information externally because it aligns customer management with corporate goals and investors’ perspectives. The authors propose a means to report customer equity that enables monitoring firms’ performance with respect to their customer assets. Furthermore, they develop a specific model for Netflix and apply it to quarterly reports that cover more than six years.