השווי החברתי של לקוחות פרופ' ברק ליבאי, בי"ס לניהול ע"ש אריסון במרכז הבינתחומי

1. 1Prof. Barak Libai

2. A moment of history
2Prof. Barak Libai

3. Marketing Era : The product
3Prof. Barak Libai

4. In the beginning, it was the age of the product
• Or, actually a brand
• And we created a marketing mix for it
– The 4 P’s: Price, Place, Product, Promotion
• And calculated “Brand Equity”
4Prof. Barak Libai

5. • And when the data came , we began to better see how it
works
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6. Marketing Era : The customer
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7. And then came the “age of addressability”
• “Customer Relationship Management”, “Customer Centric
Marketing”
• Better technology and available databases enabled us to
follow individual customers on a large-scale base
– For the first time we could understand the consequences of
phenomena such as customer retention
• And we could see that that “consumers are not created equal”
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8. 8Prof. Barak Libai

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A “customer pyramid” for a firm that supplies cleaning systems and
materials to organizations

10. So the individual customer increasingly became the unit
of analysis
• We began to calculate Customer Lifetime Value
– The Net Present Value (NPV) of the future cash streams associated
with a single customer
– Increasingly used for fundamental marketing activities: which
customers to acquire, which service to give to which customers, which
advertisement to give to whom
10Prof. Barak Libai

11. Marketing Era : The network
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12. And then came the Age of Connectivity
We begin to realize that customers are a part of (smaller and larger)
“communities” or social networks that largely affect their behavior
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13. Why today?
• We know more
– We have better access to customer connectivity data
• Customer are more connected
– Cellular
– Email
– Social media
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14. Increasingly the business environment is looking at the
“social value of customers”
• The value a customer creates by affecting the consumption of
others
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15. 1. One has to take into account a “ripple effect” in the social system
– The value of A should take into account both B and C
2. Unlike lifetime value, it is not additive
– Social value of A=B+C, Social value of B=C, C should not be counted twice !
• Customers may buy later on anyhow
Prof. Barak Libai
A
CB
Social value is more problematic to assess than purchase-
based lifetime value

16. You cannot really understand customer social value until you “kill
the customer”
• And see the effect on the lifetime value of other customers
• Agent based model simulations based on real network data
can help in that.
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17. Social value fundamental issues:
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18. 1) The aim of marketers in the context of word of
mouth is to create higher customer social value
Not only conversations, impressions, “likes”, engagement, buzz,
etc. !
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19. Yet, in order to calculate social value we need to
understand conversations
Who talks to who about what and when
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20. 2) Expansion, acceleration and social value
• In a competitive environment two fundamental processes
integrate to create social value:
– “expansion” (getting new customers that would not buy otherwise)
– “acceleration” (making would-be customers purchase early)
• In the context of “seeding” the market for a new product the profit from
expansion is stronger compared to that of acceleration (~70% vs. 30%).
– However, the stronger the brand is, the higher is the role of acceleration.
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21. 3) Social value is still largely created offline
Yet much of recent academic and business knowledge on social
interactions comes from online data
This is a fundamental issue towards better understanding of the
creation of social value
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22. 4) “Influencers” will create higher than average social
value
• The extent will vary, yet targeting influencers (opinion leaders,
influentials, hubs) for a new product can bring considerably
more profit than targeting random customers
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23. However, in the absence of data on connectivity,
targeting “revenue leaders” may be a good idea
• Revenue leaders- our best (potential) life time value
customers.
– The “heavy users”.
• People tend to be in a social network with people like then,
which will be reflected in consumption
– Thus, revenue leaders will tend to be with other potential revenue
leaders
– Will create social value not because of the number of people affected,
but because WHO is affected.
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24. In a more general sense – think of lifetime value of the
people who receive the word of mouth
One piece of good news: Customers acquired via word of
mouth tend to have a larger lifetime value than customers
acquired via advertising/promotions
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25. 5) The power of “when” for social value
• For new products, the social value of an individual customer is
much higher early-on in the product life cycle.
• Not necessarily because they talk more or are more influential
then.
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0
100
200
300
400
500
600
700
800
900
1000
0 2 4 6 8 10 12
Year since introduction
Loss($) Indirect effect
direct effect
total effect
The social value of customers at different
stages of the new product life (online banking
example)
Hogan, Lemon and Libai (2003)
Direct effect-
Lifetime value
Indirect effect-
social value

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Innovators and early adopters may bring more value via
talking than via buying
Innovators
Early adopters
Early Majority
Late Majority Laggards
0
100
200
300
400
500
600
700
800
900
Adopter Category
AvergaeValue($)
Direct effect (lifetime value)- $208
The total value of customers (lifetime + social value)
for different adopter categories- online banking

28. Interesting questions that rise
• How do we want to invest in customer acquisition vs.
retention over the product life cycle?
• What is the implication of a competitor giving bad value to
their customers?
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29. 6) The “negative social value” of a defection can be
substantial
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• Social effects have been known for a while to occur in the adoption of new
products
• Recent research has showed their strength also in the case of defection of
mature products
– And the patterns in terms of social network effect are similar to that of adoption
– For cellular products the increase of the hazard of a defection given a defection in one’s
close social network can come up to 80%

30. 7) Products can also have a “social value”
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Especially in online environments

31. Consider the online interface which consumers face in
eCommerce sites
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32. This book “recommends” the purchase of other books
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33. Prof. Barak Libai
And other books recommend this book

34. Actually this can be seen as a “product network”,
for books
Prof. Barak Libai
Oestreicher-Singer &
Sundararajan 2012

35. But not only books
Prof. Barak Libai
DVD Recommendations – B&N.com

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38. • The value of a product in a recommendation system
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Product A
Intrinsic value
Incoming value
Outgoing Value
Network Value (u) = Intrinsic Value (u) + Outgoing Value (u)

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• Findings from the product network of 1M books in Amazon:
– Bestsellers have a lower “network value” than Revenue
– Low sellers (“Long Tail”) have a lower network value than Revenue

40. 40Prof. Barak Libai
We should still always remember:
If we do not give value to our customers, we will not get
lifetime or social value.

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