The Impact of Forward-Looking Metrics on Employee Decision-Making: The Case of Customer Lifetime Value

Autor:	Pablo Casas-Arce, V.G. Narayanan, F. Asís Martínez-Jerez
Rok vydání:	2016
Předmět:	Economics and Econometrics Customer retention Actuarial science Customer profitability 05 social sciences Future value Customer lifetime value 050201 accounting Customer advocacy Cross-selling Customer equity Accounting 0502 economics and business 050211 marketing Metric (unit) Business Finance
Zdroj:	The Accounting Review. 92:31-56
ISSN:	1558-7967 0001-4826
Popis:	This paper analyzes the effects of forward-looking metrics on employee decision-making. We use data from a bank that started providing branch managers with the customer lifetime value (CLV)—an estimate of the future value of the customer relationship—of mortgage applicants. The data allow us to gauge the effects of enriching the employees' information set in an environment where explicit incentives and decision rights remained unchanged. On average, customer value increased 5 percent after the metric's introduction. The metric's availability resulted in a significant shift in attention toward more profitable client segments and some improvement in cross-selling. However, the use of CLV did not negatively impact pricing or default risk, as the literature predicts. Finally, branch managers with shorter tenure displayed a stronger response, consistent with information substituting for experience.
Databáze:	OpenAIRE
Externí odkaz:	https://explore.openaire.eu/search/publication?articleId=doi_________::b6a33c6c8bc2a1a957c47d16bbaab0df https://doi.org/10.2308/accr-51554 Zobrazit plný text záznamu