Driving Customer Equity

Companies often make strategic product decisions based on case-by-case profitability analyses. Although this approach may seem rational, it can lead to some bad decisions. For example, a decision could be made to eliminate an unprofitable product which is actually a loss leader, or a product which attracts profitable customers to the brand. Driving Customer Equity recommends inserting the customer into the equation. According to the authors, when making decisions, companies should take account of the impact on customer equity, that is the current and future value of their customer base. They then go one to suggest numerous ways that businesses can increase their customer equity.