Part 1. Marketing Strategy
Published Online: 15 DEC 2010
Copyright © 2011 John Wiley & Sons, Ltd. All rights reserved.
Wiley International Encyclopedia of Marketing
How to Cite
Lemon, K. N. and Lemon, L. J. 2010. Customer Equity. Wiley International Encyclopedia of Marketing. 1.
- Published Online: 15 DEC 2010
Customer equity is defined as the total lifetime value of a firm's current and potential customer base. The customer equity (CE) construct can be utilized via both a conceptual framework (CE framework) and a mathematical model (CE model) which will allow a firm to evaluate various marketing initiatives, either conceptually or by a potential-ROI analysis, in order to create, manage, and grow the firm's CE. The CE framework utilizes three primary elements that drive the creation and dynamic growth of CE: value, brand, and relationship. With insights derived from the CE framework and CE model, a firm can tailor its marketing efforts to meet unfulfilled customer expectations, and identify and exploit situations in which the firm has a competitive advantage vis-à-vis its competitors. This allows the firm to make a more disciplined and informed decision on which marketing initiatives to implement and at what levels.
- customer lifetime value;
- customer equity;
- customer management