Why Your Business Really Is Only as Valuable as Your Customers

Many businesses will say that their customers are their most valuable assets, but few understand how true that is — or how accurately a measurement of customer-based value can price their whole enterprise.

In their new paper, “Valuing Subscription-based Businesses Using Publicly Disclosed Customer Data,” Wharton marketing professor Peter Fader and Wharton doctoral candidate Daniel McCarthy, along with professor Bruce Hardie of the London Business School, successfully built a model that allowed them to do just that — with formulas that concretely link the value of a business’s customers to the overall value of the firm. Fader and McCarthy recently spoke with Knowledge@Wharton about how their work can help corporate finance folks and retail investors alike, why they are making their models public, and why all customers are most decidedly not created equal. More: http://knlg.net/1JC5tHt