Understanding the Impact of Customer Demographics on the Lifetime Value of Small Business Customers

Abstract

The aim of the study is to understand the impact of demographic factors of customers with customer lifetime value (CLV). The data for the study are collected through a survey of 650 customers of small retailers. The data are analysed using regression, one-way analysis of variance and independent sample t-test. The results reveal a significant association between the demographic factors (age, monthly income, marital status, education and gender) of the participants with their CLV. However, no association is identified between educational qualifications and place of stay with CLV. Towards the end of the study, a discussion on the results, along with the implications of the study, is also put forward.

Keywords

Age customer lifetime value education family size gender income marital status place of stay

Get full access to this article

View all access options for this article.

References

Abdelwahab

, Diaa

, & Nagaty

S. A.

(2023). Demographic characteristics and consumer decision making styles: Do they impact fashion product involvement? Cogent Business and Management , 10(2).

AI Contentfy. (2023, November 6). The role of customer education in customer acquisition and retention . AI Contentfy. https://aicontentfy.com/en/blog/role-of-customer-education-in-customer-acquisition-and-retention

Alkitbi

S. S.

, Alshurideh

M. T.

, Kurdi

B. A.

, & Salloum

S. A.

(2020). Factors affect customer retention: A systematic review . Proceedings of the International Conference on Advanced Intelligent Systems and Informatics.

Amin

, Rezaei

, & Tavana

F. S.

(2015). Gender differences and consumers repurchase intentions: The impact of trust propensity, usefulness and ease of use for implication of innovative online retail. International Journal of Innovation and Learning , 17(2), 217–233.

Atieno

L. M.

(2024, October 9). What is customer lifetime value and how to find it . BoldDesk by Syncfusion.

Awaad

S. A.

, Kortam

, & Ayad

(2024). Examining the impact of price sensitivity on customer lifetime value: Empirical analysis. Cogent Business and Management , 11(1).

Bain

(2018, August). Customer lifetime value for small businesses . Strategic Finance. https://www.sfmagazine.com/articles/2018/august/customer-lifetime-value-for-small-businesses/

Bayon

, Gutsche

, & Bauer

(2002). Customer equity marketing: Touching the intangible. European Management Journal , 20(3), 213–222.

Bekamiri

, Mehraeen

, Pooya

, & Sharif

(2020). A stochastic approach for valuing customers in banking industry: A case study. Industrial Engineering and Management Systems , 19(4), 744–757.

10.

Berger

P. D.

, & Nasr

N. I.

(1998). Customer lifetime value: Marketing models and applications. Journal of Interactive Marketing , 12(1), 17–30.

11.

Bernat

J. R.

, Koning

A. J.

, & Fok

(2018). Modelling customer lifetime value in a continuous, non-contractual time setting . Erasmus University.

12.

Bhat

, & Darzi

M. A.

(2014). Exploring the role of gender on customer satisfaction: A customer relationship perspective from banking sector. The Business Review , 18(1 and 2), 44–51.

13.

Blattberg

R. C.

, Getz

, & Thomas

J. S.

(2001). Customer equity: Building and managing relationships as valuable assets . Harvard Business School Press.

14.

Blattberg

R. C.

, & Thomas

J. S.

(2001). Valuing customers. Marketing Science , 20(4), 410–424.

15.

Blattberg

R. C.

, Kim

B. D.

, & Neslin

S. A.

(2008). Database marketing: Analyzing and managing customers . Springer.

16.

Borle

, Singh

, & Jain

(2008). Customer lifetime value measurement. Management Science , 54(1), 100–112.

17.

Budke

(2024). A study on consumer buying behavior patterns of hospitality industry in India. Rabindra Bharati Patrika , XXVI(7), 145.

18.

Bujang

M. A.

, & Baharum

(2017). A simplified guide to determination of sample size requirements for estimating the value of intraclass correlation coefficient: A review. Archives of Orofacial Sciences , 12(1), 1–11.

19.

Calciu

(2009). Deterministic and stochastic customer lifetime value models. Evaluating the impact of ignored heterogeneity in non-contractual contexts. Journal of Targeting, Measurement and Analysis for Marketing , 17(4), 257–271.

20.

Cant

M. C.

, & Hefer

(2013). Visual merchandising displays—Functional or a waste of space in apparel retail stores? Gender and Behaviour , 11(1), 5336–5341.

21.

Caruana

(2002). Service loyalty: The effect of service quality and the mediating role of customer satisfaction. European Journal of Marketing , 36(7/8), 811–828.

22.

Chandrasekar

K. S.

, & Raj

R. V.

(2013). Family and consumer behavior. International Journal of Management and Social Sciences Research , 2(7), 17–20.

23.

Chang

, Chang

, & Li

(2012). Customer lifetime value: A review. Social Behaviour and Personality , 40(7), 1057–1064.

24.

Chen

(2018). Estimating customer lifetime value using machine learning techniques. In

Thomas

(Ed.), Data mining . IntechOpen. https://dx-doi-org.web.bisu.edu.cn/10.5772/intechopen.76990

25.

Cohen

, Cohen

, West

S. G.

, & Aiken

L. S.

(2003). Applied multiple regression/correlation analysis for the behavioral sciences (3rd ed.). Routledge.

26.

Connelly

L. M.

(2008). Pilot studies. Medsurg Nursing , 17(6), 411–412.

27.

Cooil

, Keiningham

T. L.

, Aksoy

, & Hsu

(2007). A longitudinal analysis of customer satisfaction and share of wallet: Investigating the moderating effect of customer characteristics. Journal of Marketing , 71(1), 67–83.

28.

Deka

, & Borman

(2020). Impact of online shopping practices on retail stores: With special reference to apparel stores of Nagaon town of Assam. Our Heritage , 68(1), 8180–8193.

29.

DeVellis

R. F.

(2016). Scale development: Theory and applications (4th ed.). Sage Publications.

30.

Diener

, Gohm

C. L.

, Suh

, & Oishi

(2000). Similarity of the relations between marital status and subjective well-being across cultures. Journal in Cross-Cultural Psychology , 31(4), 419–436.

31.

Djeri

, Armennski

, Tesanovic

, Bradic

, & Vukosav

(2014). Consumer behavior: Influence of place of residence on the decision-making process when choosing a tourist destination. Economic Research- EkonomskaIstrazivanja , 27(1), 267–279.

32.

Dudziak

, Stoma

, & Osmolska

(2023). Analysis of consumer behavior in the context of place of purchasing food products with particular emphasis on local products. International Journal of Environmental Research Public Health , 20(3), 2413.

33.

Eisingerich

A. B.

, & Bell

S. J.

(2008). Perceived service quality and customer trust: does enhancing customers’ service knowledge matter? Journal of Service Research , 10(3), 256–268.

34.

Ekinci

, Ulengin

, Uray

, & Ulengin

(2014). Analysis of customer lifetime value and marketing expenditures decisions through Markovian based model. European Journal of Operational Research , 237(1), 278–288.

35.

FasterCapital. (2024, June 28). Family segmentation: How to segment your customers by their family status and role . https://fastercapital.com/content/Family-Segmentation–How-to-Segment-Your-Customers-by-Their-Family-Status-and-Role.html#Segmenting-Customers-Based-on-Household-Size.html

36.

Glebova

(2015). Customer value during his lifecycle . Higher School of Economics University.

37.

Glebova

(2016). Customer lifetime value: Methods of evaluation . Higher School of Economics University.

38.

Gonçalves

H. M.

, & Sampaio

(2012). The customer satisfaction-customer loyalty relationship: Reassessing customer and relational characteristics moderating effects. Management Decision , 50(9), 1509–1526. https://doi.org/10.1108/00251741211266660

39.

Government of India, Ministry of Finance. (2018). Economic survey 2017-18 . Oxford University Press. https://www.indiabudget.gov.in/economicsurvey/

40.

Gravetter

F. J.

, & Wallnau

L. B.

(2016). Statistics for the behavioural sciences (10th ed.). Cengage Learning.

41.

Gupta

, & Lehmann

D. R.

(2003). Customers as assets. Journal of Interactive Marketing , 17(1), 9–24.

42.

Gupta

, Lehmann

D. R.

, & Stuart

J. A.

(2004). Valuing customers. Journal of Marketing Research , 41(1), 7–18.

43.

Gupta

, & Lehmann

D. R.

(2005). Managing customers as investments: The strategic value of customers in the long run . Wharton School Publishing.

44.

Haverila

, Haverila

K. C.

, & Twyford

J. C.

(2023). The influence of marital status on customer-centric measures in the context of a ski resort using the importance of performance map analysis (IPMA) framework. European Journal of Management , 28(1), 49–68.

45.

Hill

(1998). What sample size is “enough” in internet survey research? Interpersonal Computing and Technology: An Electronic Journal for the 21st Century, 6(3–4), 1–12.

46.

Hiramanek

, Thorpe

, & Chaudhari

(2020, December 10). Enhancing customer lifetime value (CLV) through connected data [PowerPoint slides]. Datamatics. https://www.datamatics.com/hubfs/WEBINAR%20PDFs/Enhancing%20CLV%20through%20connected%20data.pdf

47.

Hiziroglu

, & Sengul

(2012). Investigating two customer lifetime value models from segmentation perspective. Procedia-Social and Behavioral Sciences , 62, 766–774.

48.

Homburg

, & Giering

(2001). Personal characteristics as moderators of the relationship between customer satisfaction and loyalty——An empirical analysis. Psychology and Marketing , 18(1), 43–66.

49.

Horak

(2017). Customer lifetime value in B2B markets: Theory and practice in the Czech Republic. International Journal of Business and Management , 12(2), 47–55.

50.

Isaac

, & Michael

W. B.

(1995). Handbook in research and evaluation: For education and the behavioral sciences (3rd ed.). EdITS.

51.

Jain

, & Singh

(2002). Customer lifetime value research in marketing: A review and future direction. Journal of Interactive Marketing , 16(2), 34–46.

52.

Jana

(2012). The analysis of the influence of residence in the purchase of pharmaceutical products. Journal of Competitiveness , 4(1).

53.

Kahreh

M. S.

, & Kahreh

Z. S.

(2012). An empirical analysis to design enhanced customer lifetime value: Evidences from Iranian banking sector. Iranian Journal of Management Studies , 5(2), 145–167.

54.

Kaligis

J. N.

, Muhari

M. D. A.

, & Sopiana

(2023). Effect of gender on customer loyalty. Journal of Law and Sustainable Development , 11(3), e610.

55.

Kim

(2010). An examination of the multiple dimensions of price perception among restaurant customers. Journal of Korean Society of Food Culture , 25(2), 134–140.

56.

Klopotan

, Buntak

, & Drozdjek

(2014). Impact of education, gender and age on consumer loyalty. International Journal for Quality Research , 8(4), 481–494.

57.

Kulviwat

, Guo

, & Engchanil

(2004). Determinants of online information search: A critical review and assessment. Internet Research , 14(3), 245–253.

58.

Kumar

(2007). Customer lifetime value—The path to profitability. Foundations and Trends in Marketing , 2(1), 1–96.

59.

Kumar

S. P.

(2014). Impact of educational qualification of consumers on information search: A study with reference to car. International Journal on Global Business Management and Research , 2(2), 39–47.

60.

Kumar

, & Reinartz

(2006). Customer relationship management: A database approach . John Wiley & Sons.

61.

Kumar

, & Reinartz

(2016). Creating enduring customer value. American Marketing Association , 80(6), 36–68. https://doi.org/10.1509/jm.15.0414

62.

Kumar

, & Shah

(2009). Expanding the role of marketing: From customer equity to market capitalization. Journal of Marketing , 73(6), 119–136.

63.

Kumar

, & Sunder

(2016). CLV and its relevance to the CPG industry. In

Stewart

D. W.

& Gugel

C. T.

(Eds), Accountable marketing . Routledge.

64.

Lawan

, & Zanna

(2013). Evaluation of socio-cultural factors influencing consumer buying behaviour of clothes in Borno State, Nigeria. International Journal of Basic and Applied Science , 1(3), 519–529. https://doi.org/10.17142/ijbas-2012.1.3.7

65.

Lugioyo

R. A.

(2022). Demographic variable that influence the purchase decision [Doctoral dissertation]. Florida International University.

66.

Marisa

, Ahmad

S. S. S.

, Fachrudin

Z. I. M. Y.

, & Aziz

T. M. A.

(2019). Segmentation model of customer lifetime value in small and medium enterprise using K-Means clustering and LFRM model. International Journal of Integrated Engineering , 11(3), 169–180.

67.

McGuire

W. J.

(1976). Some internal psychological factors influencing consumer choice. Journal of Consumer Research , 2(4), 302–319. https://doi.org/10.1086/208643

68.

Mendenhall

, Beaver

R. J.

, & Beaver

B. M.

(2013). Introduction to probability and statistics (14th ed.). Brooks/Cole Cengage Learning.

69.

Mittal

, & Kamakura

W. A.

(2001). Satisfaction, repurchase intent and repurchase behaviour: Investigating the moderating effect of customer characteristics. Journal of Marketing Research , 38(1), 131–142.

70.

Mokhlis

, & Salleh

H. S.

(2009). Consumer decision-making styles in Malaysia: An exploratory study of gender differences. European Journal of Social Sciences , 10(4), 574–584.

71.

Mor

, Madan

, Archer

G. R.

, & Ashta

(2020). Survival of the smallest: A study of microenterprises in Haryana, India. Millennial Asia , 11(1), 54–78.

72.

Nandi

(2017, August 24). Startup basics: What is customer lifetime value (CLV or CLTV)? Our Own Startup. https://ourownstartup.com/startup-basics-what-is-customer-lifetime-value-clv-or-cltv/

73.

Nunnally

J. C.

, & Bernstein

I. H.

(1994). Psychometric theory . McGraw-Hill, Inc.

74.

Olodo

, Aremu

M. A.

, & Raji

(2022). Demographic variables: A predictor of consumer buying behaviour in formal and informal retail outlets. Social Informatics, Business Politics, Law and Technology Journal , 8(2), 79–92.

75.

Pelau

(2013). The influence of the income on the cognitive and emotional reactions of the consumer. Timisoara Journal of Economics , 5(18), 221–235.

76.

Pfeifer

P. E.

, & Carryway

R. L.

(2000). Modeling customer relationships as Markov chains. Journal of Interactive Marketing , 14(2), 43–55.

77.

J. Y.

, Qu

Q. X.

, Zhou

Y. P.

, & Li

(2015). The impact of users characteristics on customer lifetime value raising: Evidence from mobile data service in China. Information Technology Management , 16, 273–290.

78.

, Zhou

Y. P.

, Chen

, & Qu

Q. X.

(2012). Are customer satisfaction and customer loyalty drivers of customer lifetime value in mobile data services: A comparative cross-country study. Information Technology and Management , 13(5), 281–296. https://doi.org/10.1007/s10799-012-0132-y

79.

Raman

(2017). Demographics variables and its impact on the factors affecting the women consumer’s online repeat purchase intention in India: An empirical study. IIMS Journal of Management Science , 8(3), 336–355.

80.

Ramya

, & Ali

S. A. M.

(2016). Factors affecting consumer buying behavior. International Journal of Applied Research , 2(10), 76–80.

81.

Rasid

(2003). Relationship marketing: Case studies of personal experiences of eating out. British Food Journal , 105(10), 742–750.

82.

Reinartz

, & Kumar

(2000). On the profitability of long-life customers in a non-contractual setting: An empirical investigation and implications for marketing. Journal of Marketing , 64(4), 17–35.

83.

Roberts

M. L.

, & Berger

P. D.

(1989). Direct marketing management . Prentice Hall.

84.

Ryals

(2002). Are your customers worth more than the money? Journal of Retailing and Consumer Services , 9(5), 241–251. https://doi.org/10.1016/S0969-6989(02)00005-X

85.

Siddiqui

U. A.

, & Khan

M. S.

(2017). An exploratory study on effect of demographic factors on customer satisfaction and its determinants in e-retailing. Management Studies and Economic Systems , 3(3), 159–171.

86.

Singh

S. S.

, & Jain

D. C.

(2013). Measuring customer lifetime value: Models and analysis (INSEAD Working Paper No. 2013/27/MKT). https://doi.org/10.2139/ssrn.2214860

87.

Slaba

(2019). The impact of age on the customers buying behaviour and attitude to price. LitteraScripta , 12(2).

88.

Stanton

W. J.

, Michael

J. E.

, & Bruce

J. W.

(1994). Fundamentals of marketing . McGraw Hill Inc.

89.

Sudirman

, & Sidin

(2018). The comparison of development model of customer lifetime value (CLV) for private and public hospitals in Makassar, Indonesia. Academy of Strategic Management Journal , 17(4), 1–8.

90.

Sun

, Foscht

, & Eisingerich

A. B.

(2021). Does educating customers create positive word-of-mouth? Journal of Retailing and Consumer Services , 62, 102638.

91.

Talak

, & Washington

(2013). Salary as predictive metrics for customer lifetime value (CLV). A case of Meikles departmental store in Zimbabwe. International Journal of Business and Management Invention , 2(7), 38–52.

92.

Tao

, Sun

, Liu

, Tian

, & Zhang

(2022). The impact of consumer purchase behavior changes on the business model design of consumer devices companies over the course of Covid-19. Frontiers in Psychology , 13.

93.

Treece

E. W.

, & Treece

J. W.

(1982). Elements of research in nursing (3rd ed.). Mosby.

94.

Tsiotsou

, & Vasioti

(2006). Using demographics and leisure activities to predict satisfaction with tourism services in Greece. Journal of Hospitality and Leisure Marketing , 14(2), 69–82.

95.

Velaudham

(2019). Marital differences towards consumer buying behaviour. Ajanta , VIII(II).

96.

Walsh

, Evanschitzky

, & Wunderlich

(2008). Identification and analysis of moderator variables: Investigating the customer satisfaction-loyalty Link. European Journal of Marketing , 42(9/10), 977–1004.

97.

Wang

, Fu

Z. L.

, Guo

, Liang

R. Y.

, & Shao

H. Y.

(2020). What influences sales market of new energy vehicles in China? Empirical study based on survey of consumers’ purchase reasons. Energy Policy , 142, 111484.

98.

White

L. V.

, & Sintov

N. D.

(2017). You are what you drive: Environmentalist and social innovator symbolism drives electric vehicle adoption intentions. Transportation Research Part A: Policy and Practice , 99, 94–113. https://doi.org/10.1016/j.tra.2017.03.008

99.

Yang

, Cheng

, Li

, & Wang

(2019). Which group should policies target? Effects of incentive policies and product cognitions for electric vehicle adoption among Chinese consumers. Energy Policy , 135, 111009. https://doi.org/10.1016/j.enpol.2019.111009

100.

Yusuf

, Moeljadi

, Rohman

, & Rahayu

(2015). Customer income as the moderator on the relation of customer satisfaction, loyalty and switching intention (Study case through Telkomsel customers at Makassar city). International Journal of Business and Management Invention , 4(2), 16–24.

101.

Zeithaml

V. A.

(1985). The new demographics and market fragmentation. Journal of Marketing , 49(3), 64–75. https://doi.org/10.1177/002224298504900306

102.

Zontanos

, & Anderson

A. R.

(2004). Relationships, marketing and small business: An exploration of links in theory and practice. Qualitative Market Research: An International Journal , 7(3), 228–236.