Author: Professor Steve Stubben
Title: Senior Associate Dean, Research
Francis Armstrong Madsen Endowed Professor
Department: School of Accounting
Co-Author(s): Hengda Jin, Karen Ton
Paper Title: Customer Shopping Behavior and the Persistence of Revenues and Earnings
Journal: The Accounting Review

Summary:
Investors value recurring revenue because it indicates financial stability and lower risk, often resulting in a higher valuation multiple for companies with persistent revenue streams. This study examines how customer characteristics and shopping behaviors contribute to revenue persistence. By analyzing GPS location data from over 3 billion customer visits to retail locations, we measure customer behavior patterns, including visit frequency, travel distance, visit length, and timing. Our findings show a strong link between these behaviors and consistent revenue and earnings, suggesting that businesses with loyal, engaged customers enjoy not only higher but also more stable financial outcomes. Additionally, we observe that firms can make more effective capital investment and inventory management decisions when their internal systems incorporate insights on these customer behaviors.