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…
Category: Accounting For Marketing
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…
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,…
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…
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…
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…
The Destiny of Accounting Measures of Customer Assets
In an optimistic piece Keiningham, Aksoy, and Bejou outline what they think the future of customer asset management is. What should we expect for accounting measures of customer assets? How should we expect such assets to be treated in the future? Why Are Accounting Measures Of Customer Assets So Bad? They note three big problems….
Double Entry Bookkeeping
It is helpful for marketers to understand accounting. The phrase double entry bookkeeping has a tendency to put people off but that is unfortunate. The idea that each event is represented by two entries is an elegant one. Marketers can learn a lot from the strengths of such an approach. Double Entry Bookkeeping Aids Understanding…
The Role Of Budgeting In Organizations
One of the problems managers face with budgets is that budgeting has a variety of different roles. These roles can all be important but the roles sometimes conflict. Barrett and Fraser writing in the Harvard Business Review more than 40 years ago distinguished between three types of budgets: Capital (major investment planning), Financial (cash flow/bank…
Catch 22 And Accounting For Employees
A theme of mine is the challenge that marketers have with financial accounting. Essentially most marketing spending is accounted for as an expense. This is even if it has the explicit intention to be an investment. This makes financial reports pretty poor for understanding the marketing of a firm. What about Human Resources (HR). We…
