Customer lists or accounts refer to customers, service users and corporate products. Companies that have been operating for a long time would establish a large customer base in their own hands, hence appeal to investors who may want to join the venture as a shortcut to expand the business quickly and less risky. Two reasons for appraising the customer lists are, first, to know the value of the customer’s account in business negotiations before the deal in order to determine the value of the intangible assets of the organization that are likely to have a higher value than the tangible assets. Secondly is for the sake or account recording after the purchase has been completed. The appraisers will group the customers into 3 main groups; frequent customers, non-regular customers, and a group of one-time customers. However, customer segmentation may also be adjusted according to organizational behavior. The 2 methods of appraisal are:
The cost approach takes the aspect of the cost of putting money into the acquisition of customers that can be classified into groups such as advertising, relationship building in various forms in order to build confidence and trust among customers.
The income approach looks in terms of generating income for each customer based on sales and the profit rate from customers as each customer differs. The projection is then made regarding the possibility that the customer will use the service which may be in accordance with the contract or other related factors. This will determine the customer account value from the revenue method.
