Customer Centricity by Peter Fader

Author:Peter Fader
Language: eng
Format: epub, pdf
Publisher: Wharton School Press

What Is Customer Equity?

Much like customer centricity as a whole, the notion of customer equity remains somewhat on the fringes of business practices today, so I’m quite certain there is far greater backing for the formalization of brand equity than there is for the widespread introduction of customer equity to mainstream marketing discussion or even balance sheets. With that said, I’m hopeful.

I’m hopeful because I see progress being made and because I can actually foresee a day (in the not-too-distant future, actually) when the math on which customer equity is built will actually be solid enough to win over both the holdouts in my own field of marketing and the good people of the finance world as well. Even today, in fact, my sense is that those finance folks—the CFOs, the accountants, the auditors—are already more comfortable with the ideas behind customer equity than they are with those ideas behind brand equity. They appear willing to believe that a customer might actually be a more appropriate fit on a balance sheet than a nebulous brand could ever be. They are starting to see, I think, that when it comes to customers—those miniature profit centers that power every company’s growth—there is some real value there. You know what? They’re right.

As a believer in the ideas behind customer equity, I am generally pleased when anyone even makes a passing mention of the idea. I believe in these ideas, after all, so I want them out there. But it bothers me when people talk about customer equity as some kind of hazy, indefinable concept because customer equity is anything but hazy or indefinable. It really can be quantified (although, I admit, not always as precisely as we might hope); it can (and should) be counted among a company’s assets; and most important, it can be leveraged to generate future growth.

Customer equity, quite simply, lies at the very heart of customer centricity. We can’t become customer centric until we understand customer equity—what it is, how we define it, and what we’re supposed to do with it.

I define it as follows:

Customer equity is the sum of the customer lifetime values across a firm’s entire customer base.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.