A thorough explanation of strategies and examples for turning customers into "assets"
Posted: Thu Jan 23, 2025 5:10 am
Customers are valuable assets to companies. And "Customer Equity" is an indicator that shows this value. Customer Equity is a very important indicator for companies to stabilize and grow their management . However, after reading this far, some of you may be thinking, "I don't understand anything about Customer Equity at all." In this article, we will explain the meaning of Customer Equity, along with the three elements that make it up and the specific measures required to improve it. We will explain it in an easy-to-understand manner so that even those who have heard the term Customer Equity for the first time can easily understand. We will also introduce examples of improvement, so please refer to it if you would like to improve your Customer Equity in the future.
What is Customer Equity?
Customer Equity refers to the total economic benefit that each gcash database customer brings to a company over their lifetime. It is a very important indicator for corporate growth and long-term business stability.
Definitions and Basic Concepts
Customer Equity is the total economic benefit that a single customer brings to a company over their lifetime . It is based on the concept that customers have asset value to a company.
Tangible value is the benefit each customer brings to the company minus the costs to the company.
Since it is the sum of new and existing customers, in order to improve it, it is important to know how to acquire new customers and prevent the loss of existing customers.
Increasing your company's value also leads to increased Customer Equity.
Difference from LTV
A term similar to Customer Equity is "LTV (Customer Lifetime Value)," but the scope of these terms is different.
While Customer Equity is the total profit of all customers in a company , LTV refers to the profit that one customer brings to a company . In other words, Customer Equity can be thought of as the sum of the LTVs of all customers.
Rather than using either Customer Equity or LTV as an indicator of your business strategy, you can use them together depending on the case and purpose to create a more effective strategy.
Three Elements of Customer Equity
Customer Equity has three main components:
To implement an effective business strategy, your company needs to be clear on which factors it will focus on or which factors it will have the greatest influence on.
Each company will have different factors to focus on, so let's start by looking at each of them.
Customer Value
Customer value refers to the value that customers perceive as fair for a product or service. Customers evaluate products and services based on three criteria: quality, price, and convenience.
"Quality": The higher the quality of products and services, the greater the customer satisfaction.
"Price": Customers evaluate the price as being fair, not too high or too low.
Convenience: The easier a product or service is to buy or use, the more likely customers are to return to the company.
In this way, customer equity, which is evaluated objectively and rationally by customers, is called customer value.
What is Customer Equity?
Customer Equity refers to the total economic benefit that each gcash database customer brings to a company over their lifetime. It is a very important indicator for corporate growth and long-term business stability.
Definitions and Basic Concepts
Customer Equity is the total economic benefit that a single customer brings to a company over their lifetime . It is based on the concept that customers have asset value to a company.
Tangible value is the benefit each customer brings to the company minus the costs to the company.
Since it is the sum of new and existing customers, in order to improve it, it is important to know how to acquire new customers and prevent the loss of existing customers.
Increasing your company's value also leads to increased Customer Equity.
Difference from LTV
A term similar to Customer Equity is "LTV (Customer Lifetime Value)," but the scope of these terms is different.
While Customer Equity is the total profit of all customers in a company , LTV refers to the profit that one customer brings to a company . In other words, Customer Equity can be thought of as the sum of the LTVs of all customers.
Rather than using either Customer Equity or LTV as an indicator of your business strategy, you can use them together depending on the case and purpose to create a more effective strategy.
Three Elements of Customer Equity
Customer Equity has three main components:
To implement an effective business strategy, your company needs to be clear on which factors it will focus on or which factors it will have the greatest influence on.
Each company will have different factors to focus on, so let's start by looking at each of them.
Customer Value
Customer value refers to the value that customers perceive as fair for a product or service. Customers evaluate products and services based on three criteria: quality, price, and convenience.
"Quality": The higher the quality of products and services, the greater the customer satisfaction.
"Price": Customers evaluate the price as being fair, not too high or too low.
Convenience: The easier a product or service is to buy or use, the more likely customers are to return to the company.
In this way, customer equity, which is evaluated objectively and rationally by customers, is called customer value.