A DEA-based approach to customer value analysis
Cherchye, Laurens De Rock, Bram Dierynck, Bart Kerstens, Pieter Jan Roodhooft, Filip
Cherchye, Laurens
De Rock, Bram
Dierynck, Bart
Kerstens, Pieter Jan
Roodhooft, Filip
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Publication Type
Journal article with impact factor
Editor
Supervisor
Publication Year
2023
Journal
European Journal of Operational Research
Book
Publication Volume
308
Publication Issue
3
Publication Begin page
1319
Publication End page
1331
Publication NUmber of pages
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Abstract
Firms have become increasingly customer-centric, implying that customers, rather than products, are treated as the most important asset of a firm. The switch to customer-centric strategies also implies that firms are collecting an enormous amount of customer-related data. The purpose of this paper is to propose a DEA-based methodology to determine the contribution of customer segments to firm value. We show the practical usefulness of our methodology through an application to Activity Based Costing (ABC) data collected from a large European telecom provider, which offers fixed telephone, mobile telephone, digital television and internet subscriptions. Our analysis reveals that the average cost reduction potential across all customer segments amounts to 1.26% of the total controllable costs, which represents approximately EUR 5 million when expressed in monetary terms. We also document substantial variation in the cost reduction potential across customer segments
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Keywords
Data Envelopment Analysis, Customer Value, Multi-Output Efficiency, ABC Systems