To make sound business decisions, a firm's management must understand the value of a customer over time. This case teaches students a framework for determining the value of a customer. Students learn methods of calculating the value of current and hypothetical customers, including special cases; how customer lifetime value (CLV) relates to firm value; and the importance of other sources of value from customers, such as indirect revenue, efficiency, and network and contagion effects. Two practice problems are included at the end of the case.

Case id: 070505