Customer equity and CLV in Spanish telecommunication services

Abstract

Recent studies in various economic sectors in the U.S.A., Brazil, China, South Korea, and Australia provide evidence of the precursors of customer equity (value, brand, and relationship equity) and their influence on behavior intentions and customer lifetime value (CLV). The aim of this study is to measure customer equity through CLV, design a model for CLV drivers and establish its predictive capacity in two samples obtained at different points in time. The sample comprises customers who have contracts with telecommunications operators in Spain, and the study uses a holdout sample to cross-validate the final sample. A predictive model, developed with partial least squares, analyzes the sector, and assesses the comparability of the four main competing companies. The findings support the importance of customer perceived value in building relationship quality and in brand equity, and reveal intentional loyalty as a precursor of future economic results.