Category: Accounting and Marketing
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Adding Customers To Ratios
Marc Marshing has published a short book on using customer data in financial analysis. (I am assuming it was a dissertation or similar as it is closer to a paper than a traditional book). He talks about adding customers to ratios, specifically adding a measure of customer value to the price to book ratio. This…
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Marketing Implications Of Financial Accounting
A book chapter I wrote with Jonathan Knowles and Moeen Butt has recently come out in the Review of Marketing Research (vol 18). In our chapter, we sought to give marketers a better understanding of accounting, specifically financial accounting. What then are the marketing implications of financial accounting? Keeping Score Marketers are trying to work…
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Customer Accounting, Thanks But
It is great that accountants are looking at the idea of valuing a firm through its customers. I very much welcome this. That said, I do worry that people bringing ideas from outside their field often bring back bad habits with them. (To be clear I am sure I do this when looking at non-marketing…
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Angel And Demon Customers
Larry Selden and Geoffrey Colvin had a book back in 2003 that made quite a stir. It introduced the idea of angel and demon customers. This was a catchy way of explaining the notion that not all customers are profitable. Indeed, Selden and Colvin argue that customers should not all be treated the same. What…
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Marketers Have To Turn Up
Koen Pauwels, a well-known marketing academic at Northeastern University, has a very useful book on working with marketing data. He focuses a lot on marketing dashboards and analyzing data. Rather than attempt to relay all the points, you can read it yourself, I want to focus on a little anecdote about the creation of the…
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A Customer Equity Balance Sheet
The book, Customer Equity, is a bit of a classic in the marketing field. It is an early attempt to refocus companies from products to customers, specifically through measurement of the value of the customer base. The authors introduce a lot of interesting new ideas. They have many admirably big swings and, to be honest,…
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What Can The Marketing-Finance Interface Tell Us About Witchcraft Trials?
Edeling, Srinivasan, and Hanssens have a useful new review paper on the Marketing-Finance Interface. The Value Of Review Papers Review papers, such as this, play a vital role in helping frame the field. They give Ph.D. students a way to get up to speed on prior contributions. Review papers also give more seasoned academics a…
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Non-GAAP Disclosures and Implications for Marketing
An interesting phenomenon has emerged over recent years in financial accounting which could prove relevant to marketing. This is non-GAAP reporting by companies. What is, could be, the relatonshp between marketing and Non-GAAP disclosures. GAAP: Generally Accepted Accounting Principles The rules of external financial reporting, Generally Accepted Accounting Principles, are known as GAAP. Non-GAAP reporting…
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Understanding What Companies Are Spending On Marketing. SG&A Isn’t Great.
I often discuss marketing assets. Specifically, I worry about that the way marketing assets are accounted for in financial reports. This does not help us understand marketing effectiveness. For example, see here and here and here. This results of financial accounting choices creat a significant problem in understanding what marketing does. It means we can’t…
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Management Accounting and Customer Recording
At least one area of marketing metrics makes me positive. The future is bright. The area is what we might call management accounting and customer recording. This tends to work best where there are contractual relationships. With contracts or, at least, stable long term connections, we can go a long way to understanding the value…
