Quantifying the value of customer relationships
Abstract: Customer relationships often are a key component of a business’s value. In recent years, however, the methods used to value these relationships have become more sophisticated. And the method a valuator uses can have a significant impact on the determined value of the customer relationships. This article looks at the nuances, such as the circumstances in which customer relationships can be valued separately from goodwill; methods used to measure the future economic benefits of a customer relationship; and forecasting attrition through constant rate attrition (CRA) analysis.