Driving Customer Equity: How Customer Lifetime Value Is Reshaping Corporate Strategy

By Roland Rust, Katherine Lemon, Valarie Zeithaml

Book Overview

In their efforts to become more customer-focused, companies everywhere find themselves entangled in outmoded systems, metrics, and strategies rooted in their product-centered view of the world. Now, to ease this shift to a customer focus, marketing strategy experts Roland T. Rust, Valarie A. Zeithaml, and Katherine N. Lemon have created a dynamic new model they call "Customer Equity," a strategic framework designed to maximize every firm's most important asset, the total lifetime value of its customer base.
The authors' Customer Equity Framework yields powerful insights that will help any business increase the value of its customer base. Rust, Zeithaml, and Lemon introduce the three drivers of customer equity -- Value Equity, Brand Equity, and Retention Equity -- and explain in clear, nontechnical language how managers can base their strategies on one or a combination of these drivers. The authors demonstrate in this breakthrough book how managers can build and employ competitive metrics that reveal their company's Customer Equity relative to their competitors. Based on these metrics, they show how managers can determine which drivers are most important in their industry, how they can make efficient strategic trade-offs between expenditures on these drivers, and how to project a financial return from these expenditures. The final section devotes two chapters to the Customer Pyramid, an approach that segments customers based on their long-term profitability, and an especially important chapter examines the Internet as the ultimate Customer Equity tool. Here the authors show how companies such as Intuit.com, Schwab.com, and Priceline.com have used more than one or all three drivers to increase Customer Equity.
In this age of one-to-one marketing, understanding how to drive Customer Equity is central to the success of any firm. In particular, Driving Customer Equity will be essential reading for any marketing manager and, for that matter, any manager concerned with growing the value of the firm's customer base.

• Format: Hardcover
• Language: English
• ISBN: 0684864665
• ISBN13: 9780684864662
• Release Date: June 2000
• Publisher: Free Press
• Length: 304 Pages
• Weight: 1.10 lbs.
• Dimensions: 1.0" x 7.3" x 8.8"

Customer Reviews

Customer Equity: Moves the reader fom consepts to numbers

I approached this book as a heavy consumer of marketing literature in general and customer lifetime value literature specifically. Based on previous readings my expectations were low. However, the book's basic messages pertaining to customers not products, services not products, identifying the three drivers of customer equity and finally, how to estimate the numbers fascinated me. Through Customer Equity the reader can learn about some of the fundamentals behind what drives a company's profitability. CEOs are not concerned about the 4P's of marketing. Their focus is on the overall recourses allocation in order to secure future revenue from current and future customers. This book recognizes this and provides the reader with a roadmap to the allocation of the marketing budget among three main drivers of customer equity, i.e. brand equity, value equity or retention equity. Customer Equity provides the reader with sophisticated tools to estimate the financial consequences of the alternatives before they are executed. The ability to estimate the impact of improvement in any of the three areas on customer equity, will in my mind regain marketers access to the CEO -an access they lost to finance and strategy in the 1980s. In an era influenced by customer relationship management thinking, Customer Equity is a must reader for enlightened managers.

A Useful Tool for Marketing and Communications Managers

Many marketing executives are challenged to evaluate the impact of their marketing communications and customer relationship strategies, but too often get bogged down in short-term measures like click-throughs and direct response. Driving Customer Equity is a valuable tool for quantifying the long-term impact of investments in building a brand and improving customer satisfaction. It is based on a logical framework that recognizes the financial returns from building brand equity, improving perceived value and increasing customer satisfaction. The book does more than provide a useful framework and report real research. It also includes hands-on tools that can be used by managers, consultants and researchers. I am recommending this book to all of my clients in the hope that it encourages a long-range focus that recognizes building customer equity is more important than short-term sales.

Strong framework for shaping marketing strategy!

By presenting a simple yet powerful organizing framework linking marketing tactics to customer equity, this book helps marketing professionals understand HOW to execute a customer focused marketing strategy. It is practical and highly useful from start to finish. In addition, it is approachable yet deep enough to appeal to those looking for a strong start into this subject area.The text is concise, with a balanced use of graphics and case examples. Each chapter concludes with a "Key Insights" and "Action Steps" summary. Time-pressed readers will find the style suitable for quick reading.Dan Michaluk is a simulation designer for ExperiencePoint, creators of award-winning business simulations.

Concerned about equity in Delaware

This is a very insightful book that makes you think about different approaches to a traditional problem. How do you continue to grow your company and increase your profits? The authors focus on Brand Equity, Retention Equity, and Value Equity. They suggest new ways to think about and manage your company to make sure you are focusing on the right things in this new high speed marketplace. This is an important book for any marketing professional who wants to stay abreast of the latest thinking and strategies to increase customer retention and value.

New ideas for strategy

This book is an eye-opener. In practical, non-technical terms, it shows how corporate strategy (and especially marketing strategy) can be based on customer lifetime value rather than product profitability. It brings strategy in line with the latest thinking in customer relationship management (CRM). The ideas about making all marketing expenditures financially accountable are fascinating, and the book suggests how this can be accomplished through the concept of customer equity. Also, every company is trying to make the internet count, and this book shows how different internet marketing efforts can increase customer lifetime value in different ways. Some people at old-fashioned companies may have difficulty grasping some of these new ideas (which are rooted in the new economy and customer relationship management) but to progressive executives this book will look like the future of strategy.