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Natalie Epstein1, Santiago Gallino2, Antonio Moreno3
1Harvard Business School; 2The Wharton School; 3Harvard Business School
The current business practice and existing academic literature estimate customers’ lifetime value (CLV) for the company, considering customers’ frequency, recency, and monetary value (RFM). In this paper, we uncover the limitations of this approach and propose the Operational Customer Lifetime Value (OCLV) as a more comprehensive way to think of the long-term value of a customer for the company.
Returnless refund in online retailing operations
Amin Shahmardan, Mahmut Parlar, Yun Zhou
McMaster University, Canada
In this paper, we study a retailer's returnless refund (RR) policy, under which the retailer may issue a refund without asking the buyer to return the product. We develop parsimonious models to formulate the problem. We show that an early commitment to RR improves the retailer's profit, but only when the net salvage value is small or moderate. We also consider customers who may abuse this policy and show that surprisingly, their existence may increase profit.
