Managing Customer Equity

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Customer Equity
ustomer e!uity is defined as the total of the discounted lifetime value of all the firms customers In other words, a firm is only as good as its customers think it will "e the ne#t time they will do "usiness with that firm.
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Three Drivers of Customer Equity

Value $!uity Brand $!uity %etention $!uity

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Three Drivers of Customer Equity

& Value $!uity : the customer's objective evaluation of the firm offerings & Brand $!uity : the customer's subjective view of the firm and its offerings & %etention $!uity : the customer's view of the strength of the relationship "etween the customer and the firm.
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Value $!uity
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Value Equity is the customer's o"(ective assessment of the utility of a "rand, "ased on perceptions of what is given up for what is received.

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+rivers of Value $!uity

& #ua$ity :)ow does the customer evaluate the !uality of the firm's offerings* & %ri&e : )ow attractive is the price* & Convenien&e : )ow convenient is it to do "usiness with the firm* visit: www.studyMarketing.org

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Brand $!uity

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& Brand $!uity is the customer's su"(ective and intangi"le assessment of the "rand, a"ove and "eyond its o"(ectively perceived value. & ,his evaluation is shaped "y the firm's marketing strategy and tactics and is influenced "y the customer through life e#periences and associations with the "rand. visit: www.studyMarketing.org

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,he %ole of the Brand in Building ustomer $!uity

& Builds awareness and attracts customers & Build emotional connections with customers & %eminds customers to repurchase
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+rivers of Brand $!uity

& customer "rand awareness & customer attitude toward the "rand & customer perception of "rand ethics

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%etention $!uity

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& %etention $!uity is the tendency of the customer to stick with the "rand, a"ove and "eyond the customer's o"(ective and su"(ective assessments of the "rand. & It focuses on the relationship "etween the customer and the' firm, "ased upon the actions taken "y the firm and "y the customer to esta"lish, "uild, and maintain a relationship. 14 visit: www.studyMarketing.org

%etention e!uity considers !uestions such as:

+oes the customer "enefit from relationship with the firm* +oes the firm "enefit from its relationship with the customer* +oes the customer stand to lose if the relationship is discontinued*
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+rivers of %etention $!uity

& -oyalty programs .fre!uent purchase/reward programs0 & Special recognition and treatment programs & 1ffinity .emotional connection0 programs & ommunity programs & 2nowledge3"uilding programs .learning relationship or structural "onds0
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Source of %eference: %oland %ust, Valarie 4eithaml, and 2atherine -emon, Driving Customer Equity : Ho Customer !ifetime Value is "eshaping Corporate #trategy, 5ree 6ress

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