Customer equity: Making marketing strategy financially accountable
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The article presents an overview of the literature on customer equity and how customer equity provides an opportunity for marketers to make marketing strategy financially accountable. Traditionally, Return on Investment (ROI) models have been used to evaluate the financial expenditures required by the strategies as well as the financial returns gained by them. However in addition to requiring lengthy longitudinal data, these models also have the disadvantage of not evaluating the effect of the strategies on a firm’s customer equity. The dominance of customer-centered thinking over product-centered thinking calls for a shift from product-based strategies to customer-based strategies. Hence, it is important to evaluate a firm’s marketing strategies in terms of the drivers of its customer equity. The article summarizes a unified strategic framework that enables competing marketing strategy options to be traded off on the basis of projected financial return, which is operationalized as the change in a firm’s customer equity relative to the incremental expenditure necessary to produce the change.
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- Customer equity: Making marketing strategy financially accountable
Journal of Systems Science and Systems Engineering
Volume 13, Issue 4 , pp 405-422
- Cover Date
- Print ISSN
- Online ISSN
- Systems Engineering Society of China
- Additional Links
- Customer equity
- return on marketing
- brand equity
- customer value
- relationship marketing
- marketing strategy
- customer lifetime value
- customer satisfaction measurement
- Author Affiliations
- 1. Department of Marketing, R.H. Smith School of Business, University of Maryland, College Park, MD, 20742, USA
- 2. Marketing Department, Carroll School of Management, Fulton Hall 444,140 Commonwealth Ave, Chestnut Hill, MA, 02467, USA
- 3. Kenan-Flagler Business School, University of North Carolina, CB#3490, Chapel Hill, NC, 27599-3490, USA