Measuring Success In Customer Based Initiatives

Question 1

How can you grow the customer equity?

Answer 1

Acquire more customers 
Acquire customers who are more valuable
Increase profit per customer 
Reduce servicing cost per customer (selling additional products)
Reduce the rate of customer defection

Question 2

What is meant by return on customer?

Answer 2

Measures how well an enterprise is using customer to create value, both short and long-term. The same as return on investment
It balances the short and long-term values to provide top executives the right incentives to create shareholder value

Question 3

What are value creators, harvesters and destroyers?

Answer 3

Creators:nurture earnings likely to grow
Harvesters: future earnings likely to decline
Destroyers: future earnings will certainly decline (ROC below zero)

Question 4

What is customer equity?

Answer 4

The sum of all current and future customers LTV = firms total economic value