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ManagingCustomer Equity
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Customer EquityCustomer Equity
Customer equity is defined as the
total of the discounted lifetime valueof all the firms customers
In other words, a firm is only as good
as its customers think it will be thenext time they will do business with
that firm.
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Three Drivers ofThree Drivers of
Customer EquityCustomer Equity
Value Equity
Brand Equity
Retention Equity
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Value Equityis the customer'sobjective assessment of the utility of
a brand, based on perceptions of
what is given up for what is received.
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Quality :How does the customer
evaluate the quality of the firm's
offerings?
Price : How attractive is the price?
Convenience : How convenient is it to
do business with the firm?
Drivers ofValue Equity
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Brand Equity
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Builds awareness and attractscustomers
Build emotional connections with
customers
Reminds customers to repurchase
The Role of the Brand inBuilding Customer Equity
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customer brand awareness
customer attitude toward the brand
customer perception of brand ethics
Drivers of Brand Equity
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Retention
Equity
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Retention Equity is the tendency of thecustomer to stick with the brand, above
and beyond the customer's objective
and subjective assessments of thebrand.
It focuses on the relationship between
the customer and the' firm, based upon
the actions taken by the firm and by the
customer to establish, build, and
maintain a relationship.
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y Does the customer benefit from relationship
with the firm?
y Does the firm benefit from its relationship
with the customer?y Does the customer stand to lose if the
relationship is discontinued?
Retention equity considers
questions such as:
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Loyalty programs (frequent purchase/reward
programs)
Special recognition and treatment programs
Affinity (emotional connection) programs
Community programs
Knowledge-building programs (learning
relationship or structural bonds)
Drivers of Retention Equity
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