In my recent post about companies that go after new customers at the possible expense of existing customers, mc (aka Michelangelo Celli of the Cornucopia Group) responded with a comment about maximizing customer value.
It’s a critical concept for any organization, and one that I’ll admit is not always easy to measure. While some companies have been able to determine their customers’ lifetime value, my guess is more companies are wrestling with how to measure it than actually measuring it.
Considering all the variables involved, quantifying customer value may not be easy (depending on your industry), but don’t let that stop you. There are some good sources of help out there.
One of them is Driving Customer Equity by Roland Rust, Val Zeithaml & Katherine Lemon. This book explores the critical “drivers” of customer equity & their metrics: value equity, brand equity, and retention equity.
And in the current issue of Fast Company, Don Peppers & Martha Rogers offer a general formula for their new concept (and book) Return on Customer.
Like I said, measuring customer lifetime value may not be easy, but it is necessary.