Customer Equity | Value, Brand and Retention

The book 'Driving Customer Equity: How Customer Lifetime Value is Reshaping Corporate Strategy' defines customer equity as 'the total discounted lifestime value of all of an organizations customers'.

Three drivers of customer equityare identified:

• Value equity - perceptions of an organizations quality, price and convenience.  These perceptions are cognitive, objective, and rational
• Brand equity - Emotional, subjective and sometimes irrational perceptions of image, quality, prestige, or other emotional forms of desirability.
• Retention equity - Recent of purchase as positively effecting favorable brand loyalty

Customers must become an element of the organizations summary of key performance indicators:

Track profit goals for various customer segments, and clearly differentiate customer groups based on value.

• Most valuable customers (MVCs) - depending on how you define 'valuable'
• Most Growable Customers (MGCs) - Niche areas that have high growth potential
• Most Costly Customers (MCCs) - removed from further promotional activities