Customer equity is a result of customer relationship management. It is made up of three components.
Brand Equity – Brand equity is the customers subjective and intangible assessment of the brand above and beyond its objectively perceived value. In essence, on the name of a brand, a customer might be ready to pay more value just because of their trust in the brand.
Example: A normal pizza might cost a customer around 100 rupees. But if the pizza is from Pizza Hut, the customer will be ready to shell out more money without even looking at them. This is mainly because of the customer’s perception of the brand.
Value Equity – Value equity is the customer’s assessment based on the offer, its price and its convenience. Thus if all the three-match for the customer, the firm is said to have high-value equity.
Example – McDonald’s is a fast food item, it is available in most places and its price is considerable highly reasonable. Nike and Adidas are available at select malls, they are perceived as the leaders in sport’s shoes and customers are ready to go out of the way to get a Nike and Adidas shoe. Thus even Nike and Adidas have value equity.
Relationship Equity – Relationship equity is what makes a customer stay back with the preferred brand rather than shift to any other. Relationship equity comes to a firm which is good in maintaining personal relations and therefore the customer continues with the supplier out of habit or inertia.
Example – One of the companies with probably the highest relationship equity is Harley Davidson.
Customer Lifetime Value
CLTV is the value a customer contributes to the business over the entire lifetime at a company. It is a very important metric and is used while making important decisions about sales, marketing, product development, and customer support.
By applying CLTV managers can easily arrive at the rupee value associated with the long-term relationship with any customer.
Ideally, lifetime value should be greater than the cost of acquiring a customer.
The basic formula for calculating CLTV is the following:(Average Order Value) x (Number of Repeat Sales) x (Average Retention Time)
For example, let’s consider a Health Club where customers pay Rs.1000 per month and the average time that a person remains a customer in of the club is 3 years. Then the lifetime value of each customer is: Rs. 1,000 per month x 12 months x 3 years = Rs. 36,000. This means each customer is worth a lifetime value of Rs. 36,000.
Once CLTV is calculated the company will know how much it can spend on paid advertising such as Facebook ads, YouTube ads, Google Adwords etc. high-value acquire a new customer.
Fantastic post! This could support plenty of folks discover out about this matter. Do you wish to incorporate video clips along with these? It could undoubtedly help out. Your cause was spot on and owing to you; I probably will not have to explain all the things to my pals. I can merely direct them here. Anyway, in my language, there should not much good supply like this.
These kind of post are always inspiring and I prefer to read quality content so I happy to stumble on many decent point here in the post, writing is simply huge, thank you for the post
Can I simply say what a relief to find an individual who actually knows what
they’re discussing online. You certainly know how to
bring a problem to light and make it important. More and more people have to look at
this and understand this side of your story.
It’s surprising you are not more popular since you certainly
possess the gift.
Your page is great! You sure do know how to keep your audience entertained. Im so glad that I took the time to look at this blog, because let me tell you. Thanks.
Nice to become visiting your blog again, it continues to be months for me. Well this article that ive been waited for so long. I will need this post to total my assignment within the college, and it has same subject with your post. Thanks, wonderful share.
Starting a site kind of like this one forced me to do some research and I found your post to be quite helpful. My site is centered around the idea of knowledge, fun and sharing. I wish you decent luck with your website in the future and you can be sure I’ll be following it.
I will tell that youre very knowlegeable. Im launching an internet site soon, together with your information can be very helpful for myself.. Thanks for your help and also wishing everyone the achievement in your business.
How-do-you-do, i study your blog often and i own an analogous one and i used to be just wondering if you get much of spam comments? If thus how do you stop it, any plugin or anything youll be able to advise? I get thus often lately its driving me mad so any help is very abundant appreciated. for older folks, retirement or a huge promotion at work is a time when celebration events are going to be a great idea.
Im wondering if you have noticed how the media has changed? What once seemed like a never discussed issue has become more prevelant. Frankly it is about time we see a change.
Wow, fantastic weblog structure! How lengthy have you been blogging for? you make blogging look easy. The overall look of your website is magnificent, well the content material!
Interesting point of view. Wondering what you think of its implication on society as a whole though? There are times when things like this begin to have global expansion and frustration. I will be back soon and follow up with a response.
Its perfect time to make some plans for the future and its time to be happy. Ive read this post and if I could I want to suggest you few interesting things or tips. Perhaps you can write next articles referring to this article. I desire to read even more things about it!
I just couldn’t go away your web site prior
to suggesting that I really enjoyed the usual info a person supply
on your guests? Is gonna be back often to check
up on new posts
Simply want to say your article is as amazing. The clarity in your post is just spectacular and i could assume you are an expert on this subject.
Well with your permission let me to grab your feed to keep updated with forthcoming post.
Thanks a million and please carry on the gratifying work.
Fantastic post! This could support plenty of folks discover out about this matter. Do you wish to incorporate video clips along with these? It could undoubtedly help out. Your cause was spot on and owing to you; I probably will not have to explain all the things to my pals. I can merely direct them here. Anyway, in my language, there should not much good supply like this.
These kind of post are always inspiring and I prefer to read quality content so I happy to stumble on many decent point here in the post, writing is simply huge, thank you for the post
Can I simply say what a relief to find an individual who actually knows what
they’re discussing online. You certainly know how to
bring a problem to light and make it important. More and more people have to look at
this and understand this side of your story.
It’s surprising you are not more popular since you certainly
possess the gift.
Your page is great! You sure do know how to keep your audience entertained. Im so glad that I took the time to look at this blog, because let me tell you. Thanks.
This post has been extremely helpful to me. Thank you.
Nice to become visiting your blog again, it continues to be months for me. Well this article that ive been waited for so long. I will need this post to total my assignment within the college, and it has same subject with your post. Thanks, wonderful share.
Starting a site kind of like this one forced me to do some research and I found your post to be quite helpful. My site is centered around the idea of knowledge, fun and sharing. I wish you decent luck with your website in the future and you can be sure I’ll be following it.
Excellent brief and this article helped me alot. Say thank you I looking for your information and my seotons.
I will tell that youre very knowlegeable. Im launching an internet site soon, together with your information can be very helpful for myself.. Thanks for your help and also wishing everyone the achievement in your business.
How-do-you-do, i study your blog often and i own an analogous one and i used to be just wondering if you get much of spam comments? If thus how do you stop it, any plugin or anything youll be able to advise? I get thus often lately its driving me mad so any help is very abundant appreciated. for older folks, retirement or a huge promotion at work is a time when celebration events are going to be a great idea.
Im wondering if you have noticed how the media has changed? What once seemed like a never discussed issue has become more prevelant. Frankly it is about time we see a change.
Wow, fantastic weblog structure! How lengthy have you been blogging for? you make blogging look easy. The overall look of your website is magnificent, well the content material!
Interesting point of view. Wondering what you think of its implication on society as a whole though? There are times when things like this begin to have global expansion and frustration. I will be back soon and follow up with a response.
Its perfect time to make some plans for the future and its time to be happy. Ive read this post and if I could I want to suggest you few interesting things or tips. Perhaps you can write next articles referring to this article. I desire to read even more things about it!
I just couldn’t go away your web site prior
to suggesting that I really enjoyed the usual info a person supply
on your guests? Is gonna be back often to check
up on new posts
Hi to every body, it’s my first go to see of this weblog; this blog includes remarkable and genuinely excellent information designed for readers.
Hello Dear, are you actually visiting this website regularly, if so afterward you will definitely obtain fastidious experience.
Simply want to say your article is as amazing. The clarity in your post is just spectacular and i could assume you are an expert on this subject.
Well with your permission let me to grab your feed to keep updated with forthcoming post.
Thanks a million and please carry on the gratifying work.