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New research on customer value and value chains from Harvard Business School faculty on issues including the state of customer service leadership, keys to developing the most effective customer loyalty program, and why sometimes a valuable customer may be the person who never buys a thing.
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The Right Way to Manage Customer Churn for Maximum Profit

by Michael Blanding

Many companies actively manage customer churn but aren't seeking out the best customers to retain, warns Sunil Gupta. Open for comment; 0 Comments.

The Airbnb Lesson for Startups? Success Takes More Than Technology

by Danielle Kost

As investors speculate about the timing of an Airbnb IPO, Thales S. Teixeira discusses the analog tactics and economic conditions that helped catapult the company. Open for comment; 0 Comments.

The State of Customer Service Leadership

by Jim Aisner

The economic future of the country is largely in the hands of those who lead our service organizations, which create more employment and GDP growth than any other sector. Jim Heskett, Earl Sasser, and Len Schlesinger discuss the current state of service and their recent book, What Great Service Leaders Know & Do. Open for comment; 0 Comments.

Internalizing Global Value Chains: A Firm-Level Analysis

by Laura Alfaro, Pol Antras, Davin Chor & Paola Conconi

Manufacturing activities that used to be performed in close proximity are increasingly fragmented across firms and countries. This paper provides strong evidence that considerations driven by contractual frictions critically shape firms' ownership decisions along their value chains.

Sharpening Your Skills: Online Marketing

Re: Multiple Faculty

In this collection from our archives, Harvard Business School faculty discuss the latest research on online marketing techniques, including consumer reviews, video ads, loyalty programs, and coupon offerings. Open for comment; 0 Comments.

Customer Loyalty Programs That Work

by Maggie Starvish

Thanks to ever-improving technology, customer loyalty programs are proving extremely popular among retailers—but merchants are not getting all they should out of them. The reason? Professor José Alvarez says retailers need to see customers as partners, not transactions. Key concepts include: Most retailers are at a very basic level in using loyalty programs, and many customers see the programs as punitive. Successful retailers connect with customers via loyalty programs at three levels starting with an introduction, followed by a retailer-initiated communication, and finally with customer- or retailer-initiated feedback loops. Retailers should ask themselves, How do I create a partnership with the consumer? Data collected from these programs can help merchants make smarter decisions on everything from where to open a new store to pulling the plug on a fading brand. Closed for comment; 0 Comments.

Yes, You Can Raise Prices in a Downturn

by Sean Silverthorne

If you and your customers understand the value represented in your pricing, you can—and should—charge more for delivering more. An interview on "performance pricing" with researchers Frank Cespedes, Benson P. Shapiro, and Elliot Ross. Key concepts include: Pricing builds or destroys value faster than almost any business action. Performance pricing seeks to maximize both the customer benefit and the selling company's profitability. The idea is to create more space between the value provided to customers and your cost. Performance pricers make attractive returns in almost every business—at least over the full business cycle. Closed for comment; 0 Comments.

The Next Marketing Challenge: Selling to ’Simplifiers’

by John Quelch

The mass consumption of the 1990s is fast fading in the rearview mirror. Now a growing number of people want to declutter their lives and invest in experiences rather than things. What's a marketer to do, asks professor John Quelch. Key concepts include: As the world economy slumps, one consumer segment will grow faster than ever: The Simplifiers. Simplifiers present a challenge to marketers. These are well-off people who value quality over quantity and who do not buy proportionately more goods as their net worth increases. Dining out, foreign travel, and learning a new sport will all prove more resilient than expected in the face of recession. Closed for comment; 0 Comments.

How Do You Value a “Free” Customer?

by Sarah Jane Gilbert

Sometimes a valuable customer may be the person who never buys a thing. In a new research paper, Professor Sunil Gupta discusses how to assess the profitability of a customer in a networked setting—a "free" customer who nevertheless influences your bottom line. Key concepts include: In multi-sided markets, some customers contribute to a company's bottom line directly while others contribute indirect benefits, which are more difficult to calculate. Businesses must be able to assess the value of these "free" customers in order to efficiently allocate marketing and other expenses to grow the business, and to develop a more accurate estimate of firm value. Using a model for valuing networked customers, Gupta found that in an auction scenario, buyers and sellers had almost equal value even though sellers outnumbered buyers 4.6-to-1. Closed for comment; 0 Comments.

Commodity Busters: Be a Price Maker, Not a Price Taker

by Benson P. Shapiro

Too many businesses are price takers, not price makers. That means they are willing to lower prices to capture market share or to sign up a marquee customer. But Harvard Business School professor Benson P. Shapiro says don't let your ego get in the way of good business sense. Here are seven steps toward naming your own price. Closed for comment; 0 Comments.