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 equity are 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
Originally posted 2008-08-17 12:55:10.
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