Customer Equity

Managing Customer Equity

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Customer Equity Customer equity is defined as the total of the discounted lifetime value of all the firm’s customers In other words, a firm is only as good as its customers think it will be the next time they will do business with that firm.

Three Drivers of Customer Equity Value Equity Brand Equity Retention Equity

Three Drivers of Customer Equity
Value Equity : the customer's objective evaluation of the firm offerings
Brand Equity : the customer's subjective view of the firm and its offerings
Retention Equity : the customer's view of the strength of the relationship between the customer and the firm.

Value Equity

Value Equity is the customer's objective assessment of the utility of a brand, based on perceptions of what is given up for what is received.

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 of Value Equity

Brand Equity

Brand Equity is the customer's subjective and intangible assessment of the brand, above and beyond its objectively perceived value.
This evaluation is shaped by the firm's marketing strategy and tactics and is influenced by the customer through life experiences and associations with the brand.

Builds awareness and attracts customers
Build emotional connections with customers
Reminds customers to repurchase
The Role of the Brand in Building Customer Equity

customer brand awareness
customer attitude toward the brand
customer perception of brand ethics
Drivers of Brand Equity

Retention Equity

Retention Equity is the tendency of the customer to stick with the brand, above and beyond the customer's objective and subjective assessments of the brand.
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.

Does the customer benefit from relationship with the firm?
Does the firm benefit from its relationship with the customer?
Does the customer stand to lose if the relationship is discontinued?
Retention equity considers questions such as:

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

If you think this presentation useful, please consider telling others about our site : www.studyMarketing.org Source of Reference: Roland Rust, Valarie Zeithaml, and Katherine Lemon , Driving Customer Equity : How Customer Lifetime Value is Reshaping Corporate Strategy, Free Press

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Customer Equity

by Yodhia Antariksa on Jun 30, 2007

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Customer Equity — Presentation Transcript