Pricing Strategy

The last decade Professor Martin Boehm spent researching and consulting in the area of customer management had a profound effect on his thinking as a marketing professor at IE Business School. Those were years during which the corporate world finally realized the necessity to shift from transaction based to relationship based marketing. What really interests Prof. Boehm from a marketing standpoint is the management of customer relationships in order to increase a firm’s long-term profitability. “Customers are important intangible assets of a firm that should be valued and managed”, he says. “Only by attracting, retaining, and growing profitable customer relationships will firms be successful in the future”. His research therefore aims to provide managerial implications on how to build profitable and long-lasting customer relationships. His primary concern is to quantify the impact of various customer management activities on a customer’s lifetime value – the net present value of the stream of future profits expected over a customer’s lifetime. At the same time, Prof. Boehm develops analytical models to estimate or approximate a customer’s lifetime value. “One of the major challenges in customer relationship management is still to arrive at reliable estimates of a customer’s future profits and lifetime”, he says. “Not being able to measure a customer’s lifetime value prevents the development of successful strategies for customer management”. Prof. Boehm believes that his work on customer relationship management has broad implications for the corporate world. “I intend to develop insights on how to satisfy customer needs, but at the same time to consider the monetary consequences of doing so,” he says. “This will provide firms with a roadmap for growth.”