Valuing Non-Contractual Firms Using Common Customer Metrics

Brief Summary

Peter Fader and Dan McCarthy discuss customer lifetime value metrics and corporate valuation, emphasizing the need for transparency in non-contractual businesses.

Key points

• Customer-Based Corporate Valuation. Exploring the concept of valuing companies based on customer metrics, a shift from traditional methods.
• The Winning Metric. Discovering that frequency is the most predictive metric for future purchases.
• Demand for Transparency. Encouraging companies to disclose customer metrics for better investment decisions.
• Future of Research. Exploring the next steps in research and valuation methods, including internal data use.