• Source: Customer equity

Customer equity is the total combined customer lifetime values of all of the company's customers. It is calculated by multiplying the number of customers by the average value of each customer. Customer equity is important because it reflects the potential future revenue that a company can generate from its existing customer base.




Overview


In deciding the value of a company, it is important to know of how much value its customer base is in terms of future revenues. The greater the customer equity (CE), the more future revenue in the lifetime of its clients; this means that a company with a higher customer equity can get more money from its customers on average than another company that is identical in all other characteristics. As a result, a company with higher customer equity is more valuable than one without it. It includes customers' goodwill and extrapolates it over the lifetime of the customers.
The term is a misnomer since the term has nothing to do with the traditional meaning of equity.
There are three drivers to customer equity, all of which refer to three sides of the same thing:

Value equity: What the customer assesses the value of the product or service provided by the company to be;
Brand equity: What the customer assesses the value of the brand is, above its objective value;
Retention equity: The tendency of the customer to stick with the brand even when it is priced higher than an otherwise equal product;




Customer equity strategy


Companies often attempt to gain more customers and increase revenues by improving customer equity. They do this by:

improving consumer service
improving the value or desirability of the brand
improving goodwill
improving brand popularity such as by advertisements
improving the trust of the customer towards the brand.




See also


Net worth
Ownership equity
Customer service
Customer
Customer relationship management
Customer value proposition




References






Literature


Rust, Roland T.; Lemon, Katherine N.; Zeithaml, Valarie A.: Return on Marketing: Using Customer Equity to Focus Marketing Strategy, Journal of Marketing 68(1), 2004, 109-127




External links


Customer equity
Guide to Customer Lifetime Value
Customer equity

Kata Kunci Pencarian:

• Bob Foster (akademisi)
• Kesadaran merek
• Pemasaran dengan media sosial
• Freddy Rangkuti
• AnyDesk
• Universitas Katolik Parahyangan
• SpaceX
• Kebangkrutan FTX
• Brooke Shields
• Super Nintendo Entertainment System
• Customer equity
• Customer relationship management
• Customer lifetime value
• Interactive Brokers
• Brand equity
• Valarie Zeithaml
• Customer satisfaction
• CE
• Debits and credits
• Consumer behaviour