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Peer Review

Lifetime Value in Relationship Marketing, Customer Loyalty



Overall Numeric Rating:

2.4 stars
Content Quality: 2.3 stars
Effectiveness: 2 stars
Ease of Use: 3 stars
Reviewed: Dec 23, 2004 by Business Editorial Board
Overview: This material provides a short online tutorial on customer lifetime value. It
is a portion of the website for Jim Novo's book, "Drilling Down: Turning
Customer Data into Profits with a Spreadsheet." The Drilling Down Project is a
collection of short articles, links to books and websites, and online metrics
focusing on interactive customer relationships and loyalty techniques. The
promotional website contains information regarding online ROI, customer
lifecycles, customer retention, and the role of recency and latency online.
Upper-level marketing and business students can increase their knowledge on
topics related to online customer relationships and the ability to quantify
these online encounters.
Type of Material: The Drilling Down Project is a collection of information related to online CRM
techniques, theories, and applications. It is an online resource/tutorial
within a portion of a larger online resource on maximixing customer ROI.
Recommended Uses: This site would best be used in a setting where an instructor wants to briefly
discuss issues in calculating customer lifetime value in a very broad framework.
It would not be good to use in a setting where an instructor wants to
thoroughly explain/discuss/demonstrate customer lifetime value.

The site could be used to supplement lectures within an Internet/Database
marketing class or a lecture dealing with CRM. More specifically, the link on
"favorite drilling down" websites (left hand navigation bar), Excel calculator
(calculates how web activity/sales translates into ROI), and the discussion of
lifetime value are worthwhile. An instructor may direct a student to read some
of these articles to be later integrated into a class discussion or a class
activity could revolve around using the online excel calculator or tutorials.
Technical Requirements: Technical requirements include internet browser access, Adobe Acrobat or Word to
view the book chapters, and Excel to use the "web activity to profit"
Identify Major Learning Goals: The major learning goals are to: (1) illustrate the concept of calculating
customer lifetime value, (2) differentiate between calculating absolute and
relative customer lifetime value, (3) identify issues in calculating
customer lifetime value, (4) acquire a deeper appreciation for the complexities
of online CRM, the importance of recording and using web activity, how web
activity can translate into quantifiable profits/outcomes and the role of time
in the creation of customer profiles.
Target Student Population: The target population includes students enrolled in a direct marketing or
advanced marketing course as well as anyone interested in the concept of
calculating customer lifetime value.
Prerequisite Knowledge or Skills: The student should have an understanding of the concept of customer lifetime
value and why it is used to enhance the effectiveness of this material.
Students without this knowledge could obtain it via other links on the site. It
would also be helpful for students to have basic knowledge of principles of

Evaluation and Observation

Content Quality

Rating: 2.3 stars
Strengths: The strength is not in this individual module but in the complete package. This
module is only a small portion of a much broader discussion on how to use
customer data to help marketers enhance their profit potential.

The author does a good job of providing linkages among the various modules
created. This specific module does explain some important issues of concerns
for marketers when calculating customer lifetime value. As examples, the

-lists archived articles (see "fresh marketing articles link-left hand)
-links to CRM websites (found under the "Favorite Drilling Down Websites" link)
-calculates ROI relating to the online environment.
-provides a Consumer Metric Calculator
-addresses the importance of time when understanding customer relationships
Concerns: The module cannot truly be used in isolation. Without accessing the other
modules incorporated on the web site, there is not enough depth of information
provided to give the user a clear understanding of customer lifetime value. It
should also be noted that what is provided on the web site is only a snippet of
a more detailed book.

While the information provided on the site provides an overview, its intent is
to entice the user to acquire the book. Much of the information appears to be
"teasers" (i.e. buy my book for $129 to find out more). Furthermore, the
downloaded book chapters are primarily promises of what the book will if
purchased rather than actionable information.

Additional concerns:

1. Many specific theories/models/online calculator appeared to be developed by
the author and their credibility rests primarily on the author's claims.

2. Statistics are not followed up by references and some information is vague.

Potential Effectiveness as a Teaching Tool

Rating: 2 stars
Strengths: The material provided here can be used as a jumping off point to teach how to
calculate customer lifetime value as well as generate discussion about related
issues. The website discusses some CRM considerations that may not be stressed
in some academic textbooks.

Concerns: This module needs to be attached with other materials to be effective. It
cannot stand alone as a teaching tool. The entire site provides a better
overview but is still, at best, only summary material which covers the concepts
from only the broadest perspectives.

The website's organization and presentation of the material may frustrate some
students. Some material is vague and is offered soley to promote the book or
highlight the book's importance. The constant promotion of the book is likely to
be annoying/distracting to the student.

Ease of Use for Both Students and Faculty

Rating: 3 stars
Strengths: The site is effectively designed and the author has provided linkages throughout
the modules so the user can easily click around to get information on the
various topic areas covered. There are also some links to free tools and
additional resources that may be helpful to the user.
Concerns: The site was created as a teaser to entice the user to purchase the author's

The actual content of the site is offered in a small text box. The bulk of the
website is monopolized by the website's framework.

The ample use and referencing of links within the articles and overuse of links
at the top, right and left hand sides of the web page is frustrating.
Furthermore, the redundacy of many of the links is not needed. Some material
(i.e. calculator, links, etc.) is "lost" in the clutter.

Other Issues and Comments: The self promotion of Jim Novo's book and consulting practices is a drawback.