6) However, it does become a lot more interesting in nature when statistical methods are applied to the calculation because then probability theory can be applied as well befitting uncertainty, which is a lot more powerful a management tool than merely arriving at the point numbers. A loyal customer may regularly buy more than one brand from a company. Thus Value equity is the customers assessment based on the offer, its price and its convenience. The tools used in developing brand equity mainly include advertising, public relations and an overall holistic marketing approach. 1) Customer Equity indeed is the subject of an entire driver tree, with the drivers impacting Customer Equity in the various different ways. The customer equity concept recognizes customers as the primary source of both current and future cash-flows and thus as one of the firm's most valuable assets. By knowing the value that segments of its customers will bring, the company can know where to concentrate its marketing efforts and budget on initiatives that are meant to bring in or retain customers for a longer period of time. Customer equity is a result of customer relationship management. Each concept within the customer equity strategy is clearly organized and explained. Thank you so much. Components of Customer Equity, Bounded Rationality in organization decision making. Both brand and customer equity can exist without each other. Thus it has high value equity because it is “value for money” product. A company with higher equity is valued higher than the one with lower equity. The theory of Customer Equity can be defined as the value of the potential future revenue generated by a company’s customers in the entire lifetime of the firm. This can be measured by the loyalty programs, its reputation etc. The greater the customer equity (CE), the more future revenue in the lifetime of its clients; this means that a company with a higher customer equity can get more money from its customers on average than another company that is identical in all other characteristics. Brand equity develops and grows as a result of a customer’s experiences with the brand. Customer lifetime value (or life-time value (LTV), is the average amount of money your customers will spend on your business over the entire life of your relationship. A company with … As a result, a company with higher customer equity is more valuable than one without it. Value equity is especially important in Industrial markets mainly because B2B customers are highly aware of the convenience and pricing parameters for high cost products. 3) However, one of the most important facets of Customer Equity is that it can be used to estimate your future marketing ROI or your future return on marketing. Brand equity is very important in the consumer market. The theory of Customer Equity can be defined as the value of the potential future revenue generated by a company’s customers in the entire lifetime of the firm. Customer equity can have a “spillover” effect for more than one brand. It is also a vital and imperative data metric to know in order for a business to develop the right and effective marketing strategies to promote its products and attract customers to generate more profits and revenues. Your email address will not be published. The best-known CBBE model is the Keller Model, devised by Professor of Marketing Kevin Lane Keller and published in his mighty Strategic Brand Management . Throughout the book, these tables provide a high-level roadmap to implementing the customer equity … I am making a paper and i need to know who came up with the 3 components of customer equity. With the realization that the proper calculation of Customer Equity includes the proper assessment of the goodwill towards the, Realizing that the proper calculation of Customer Equity requires insight with respect to the customer’s assessment of your firm’s. Firms like McDonalds, Apple and Facebook have very high customer equity and that is why they have an amazing and sustainable competitive advantage.