METHOD FOR VALUING CUSTOMERS AND CUSTOMER RELATIONSHIPS
First Claim
1. A computer implemented method for valuing a customer relationship, the computer implemented method comprising:
- determining a customer variance of a customer making a purchase for the customer relationship based on data about a plurality of customers to form a determined customer variance;
identifying a present value of estimated revenues from the customer, an expenditure in acquiring an order from the customer, a length of time during which a purchase decision for the order may be deferred by the customer, and a time-value of money to form inputs; and
applying the inputs and the determined customer variance to a Black-Scholes model to generate a value for the customer relationship, wherein the value of the customer relationship forms an input to a customer relationship management system used for managing the customer.
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Accused Products
Abstract
A computer implemented method, a computer program product, and a data processing system are provided for valuing a customer or a customer relationship. Black-Scholes model for determining option value of stocks is adapted for use in valuing customers and customer relationships. Variables of Black-Scholes model are mapped to parameters relating to customers and customer relationships. A customer variance is determined for the customer relationship based on data about several customers. The value of a customer or a customer relationship is then computed by applying the customer variance and the mapped parameters to the Black-Scholes model. The computed value of the customer, or the customer relationship, is used in the decision making process to determine, among other things, which products and services to offer for sale to a customer, what the offering price to the customer should be, how much expenditures are to be allowed for the customer relationship, whether the customer relationship remains viable, perform on-going dynamic evaluation of the customer relationship, allocate marketing and advertising budgets, and suitability of business activities with respect to customers and customer relationships.
7 Citations
20 Claims
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1. A computer implemented method for valuing a customer relationship, the computer implemented method comprising:
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determining a customer variance of a customer making a purchase for the customer relationship based on data about a plurality of customers to form a determined customer variance; identifying a present value of estimated revenues from the customer, an expenditure in acquiring an order from the customer, a length of time during which a purchase decision for the order may be deferred by the customer, and a time-value of money to form inputs; and applying the inputs and the determined customer variance to a Black-Scholes model to generate a value for the customer relationship, wherein the value of the customer relationship forms an input to a customer relationship management system used for managing the customer. - View Dependent Claims (2, 3, 4, 5, 6, 7, 8)
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9. A computer usable program product comprising a computer usable medium including computer usable code for valuing a customer relationship, the computer implemented method comprising:
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computer usable code for determining a customer variance of a customer making a purchase for the customer relationship based on data about a plurality of customers to form a determined customer variance; computer usable code for identifying a present value of estimated revenues from the customer, an expenditure in acquiring an order from the customer, a length of time during which a purchase decision for the order may be deferred by the customer, and a time-value of money to form inputs; and computer usable code for applying the inputs and the determined customer variance to a Black-Scholes model to generate a value for the customer relationship, wherein the value of the customer relationship forms an input to a customer relationship management system used for managing the customer. - View Dependent Claims (10, 11, 12, 13, 14, 15, 16)
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17. A data processing system for valuing a customer relationship, comprising:
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a storage device, wherein the storage device stores computer usable program code; and a processor, wherein the processor executes the computer usable program code, wherein the computer usable program code comprise; computer usable program code for determining a customer variance of a customer making a purchase for the customer relationship based on data about a plurality of customers to form a determined customer variance; computer usable program code for identifying a present value of estimated revenues from the customer, an expenditure in acquiring an order from the customer, a length of time during which a purchase decision for the order may be deferred by the customer, and a time-value of money to form inputs; and computer usable program code for applying the inputs and the determined customer variance to a Black-Scholes model to generate a value for the customer relationship, wherein the value of the customer relationship forms an input to a customer relationship management system used for managing the customer. - View Dependent Claims (18, 19, 20)
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Specification