Customer Equity Management Research Articles

Measuring customer equity and managing the customer asset: an explanatory study in the Australian hotels

ABSTRACTAlthough there are a range of conceptual and theoretical studies about customer equity (CE) measurement and management in the literature, there are few empirical studies where these two concepts are examined together. This paper focuses on the need for a more synthesised approach and addresses calls for more research into this specific area of marketing management. A conceptual framework was developed that synthesises both customer lifetime value and customer relationship management from a customer equity management (CEM) perspective. The framework was used to empirically examine how four CE strategies, together with a firm’s use of the two types of customer data (aggregated and disaggregated), impact on CEM outcomes. Data were collected from 114 hotel managers in Australia and analysed through a decision tree methodology. The results show that hotels are utilising their CE strategies for acquisition purposes more than retention purposes (customer asset management), which overall appears to satisfice more than maximise their hotel’s capacity in achieving effective CE outcomes. The study’s contribution to theory is through empirically testing a framework that combines two discrete theoretical concepts in one study to provide insights to guide future research.

Antecedents to loyalty point redemption: Implications for customer equity management

This study examines the determinants of member customers' decision to redeem versus accumulate loyalty program (LP) points by focusing on the effects of the different transaction channels (online versus offline) and the demographic information of member customers. This study finds that transactions that occur through online channels and those made by younger customers demonstrate a greater tendency of redeeming LP points as opposed to accumulating them. This study also finds that online channels show a moderating role by mitigating the demographic effects on member customers' point redemption behavior. These findings allow LP providers to predict future LP point balances by analyzing their main transaction channels and the demographic profiles of member customers.

Customer equity management: The new business philosophy

The increasing pressure on businesses in the last decade caused by competition, technological development, and easy access to detailed information about consumers, necessitated a number of changes and rethinking of market processes and relationships. Their expression is the new management approach, implementing customer-oriented strategies at the expense of traditional product-oriented focus.The purpose of this paper is to present a theoretical framework for Customer Equity and different approaches about Customer Equity Management, suggested by the literature. Based on the review, comparative, and critical analysis of theoretical achievements, this paper presents: 1) the benefits of the concept resort for companies; 2) the strengths and weaknesses of the reviewed campaigns; 3) defined resources for the successful performance of the business in the long term.

Manajemen Ekuitas Pelanggan Sebagai Suatu Sistem Pemasaran Baru (Customer Equity Management As New Marketing System)

This study is about customer equity as a new marketing system. Customer equity’s basic premise is straighforward: The customer is a financial asset that companies and organizations should measure, manage, and maximize just like any other asset. Customer equity management is a dynamic, integrative marketing system that uses financial valuation techiques and data about customers to optimize tha acquisition of, retention of, and selling of additional products to a firm’s customers, and that maximizes the value to the company of the customer relationship throughout its life cycle. In the last two decades, managerial trends have tended to focus on either cost management or revenue growth. Customer equity management balances the two, creating market-based growth while carefully evaluating the pofitability and return on investment of marketing investment. Customer equiy management is built around three core strategies: acquisition, retention, and add-on selling. Every marketing activity affects an acquisition, retention, or add-on selling effort, or a combination of them. Keywords: Customer equity and customer life cycle.

Research on the measurement of customer equity of corporate banking business

After joining WTO, especially after 2006, Chinese government gradually opened the financial market and many foreign banks came in, which acclelrated the competition for customers. In such situations, the survival and development of commercial bank depends on its valid and rational management of customer equity.However, there is still no relevant research about customer equity of commercial bank.So,this paper improves the customer equity measurement model of Gupta and Lehmais on the basis of comparing and analyzing the existing measurement models of customer equity and then applies survey data and company reports data to calculate corporate banking business ‘customer equity of Harbin Branch of China Construction Bank,which is the basis of customer equity management and of great significance in theory and practice.

Customer equity management as formative second-order construct

Despite intensive discussions about customer equity, little research addresses how to manage customer equity from a firm's perspective. Recent literature proposes various concepts of customer equity management but does not feature an empirical study that identifies and quantifies activities that aim explicitly to maximize customer equity. In the current study, the authors develop a formative measurement instrument for customer equity management as a second-order construct that indicates how intensively firms orient their customer management toward customer value and equity. The study presents a complete process for conceptualizing and operationalizing a formative second-order construct, including a thorough literature review, intensive qualitative research, and a quantitative study with 92 customer equity managers. On the basis of this process, the authors model customer equity management as a function of three formative dimensions – customer equity analysis, customer equity strategy, and customer equity actions – measured by several formative indicators. The resulting formative operationalization satisfies the criteria for evaluating formative indexes.

The role of channel quality in customer equity management

Maximization of customer equity is a core objective of customer–company relationship management. We present an extended model of customer equity for determining the optimal allocation of marketing resources across acquisition and retention activities. Focusing on the negative relationship between acquisition and retention, we motivate channel quality as a relevant decision variable, explicate its role in the model, and demonstrate the existence of an optimal value. In addition, rather than making concavity assumptions about acquisition and retention rate response curves, we use the flexible ADBUDG model (Little, JDC, Models and Managers: the Concept of a Decision Calculus. Manag Sci 1970; 16(8): 466–484.), which allows for both S-shaped and strictly-concave relationships, and parameterize it using decision calculus. We show how to estimate and apply the model and then provide sensitivity analyses with respect to changes in the true values of model parameters as well as inaccuracy in managerial inputs. We conclude by comparing our model with extant models and discussing the implications of our research.

Dimensions and Implementation Drivers of Customer Equity Management (CEM)—Conceptual Framework, Qualitative Evidence and Preliminary Results of a Quantitative Study

SUMMARY Customer equity has become a major marketing goal in many industries. In the existing literature on customer equity, there is a strong emphasis on measuring customer equity (or customer lifetime value), while there is a lack of research on how to manage customer equity and how to implement a systematic Customer Equity Management (CEM). In this paper, based on theoretical considerations as well as on qualitative and quantitative research applying confirmatory factor analysis, we identify three dimensions of Customer Equity Management structuring a firm's CEM activities: analytical CEM, strategic CEM and operational CEM. Further, three types of CEM implementation drivers are identified which represent determinants of the three CEM dimensions. We develop measures for both the three CEM dimensions and the three implementation drivers. These measures help companies evaluating their status regarding CEM and represent the basis for empirical studies regarding the determination and effects of CEM.

Strategies for Maximizing Customer Equity of Low Lifetime Value Customers

SUMMARY The management of customer equity is becoming a major issue for firms. Traditionally, firms have concentrated on lifetime customer value and the assets that a firm can derive through relationships with customers who have high lifetime value or high equity. The majority of research in this area has examined strategies used to maximize sales and profits from high lifetime value customers. The present research examines strategies that firms need to follow with customers with low lifetime value. This paper suggests that firms develop strategies for “transactional” and “discount” customers who have traditionally been classified as low lifetime equity customers. Through an examination of extant literature and industry strategies the paper examines the reasons for ignoring these segments, and proposes strategies that will enhance segment penetration and firm performance. Implications for managers are also highlighted.

A Network Based Approach to Customer Equity Management

SUMMARY The customer equity concept has attracted substantial interest from academics and practitioners during the last years. While direct drivers of customer equity such as customer transactions, cross- and up-buying behavior have been well understood and researched, indirect effects, and in particular social network effects have been ignored, although it is well known that brand community influence, word of mouth communication and other social effects are powerful influencers of buying behavior and should thus not be ignored in customer management. Thus, we propose that the customer equity perspective should evolve into a customer network equity perspective. In the following, we develop and present a theoretical framework for extending current thinking on customer equity towards the network perspective. In particular, we derive, based on the social network literature, characteristics that are likely to be powerful predictors of a customer's network value. We make propositions for future research and highlight practical implications.

Customer Equity Management

The authors present an overview of a new approach to marketing—one that seeks to maximize customer equity by managing the customer asset. Using a resource-based view, the article provides a framework for approaching marketing through the lens of the customer asset. The authors propose that the ability to acquire, manage, and model customer information is a key asset of the firm that can be a source of sustained advantage. Challenges to the implementation of this approach and the changes that the approach necessitates in marketing strategy are discussed. The authors propose several areas for future research in the area of customer equity and management of the customer asset.

Seven Barriers to Customer Equity Management

The article reviews the evolution from brand-centered marketing to customer-centered marketing and the beginnings of a focus on viewing the customer as an asset. It illustrates the practice by describing the use of a loyalty program to identify and respond to high-potential customers in the market for business-class hotels. Next, it considers seven challenges that impede wider adoption of customer equity management and concludes with a schematic model of customer-centered marketing management.

Customer Equity Management and Strategic Choices for Sales Managers

Sales managers are increasingly being called on to manage the complete buyer-seller interface and difficulties they face in managing customer relations maybe attributable to balancing firm goals/practices with those of customers. By understanding that customer relationships are characterized by customer resource investments, sales managers can effectively manage investments that firms desire together with those customers are providing. In this paper, customer equity is proposed as a framework for managing customer relationships. From this perspective, sales managers can understand the resource investments and socialization forms that are useful for managing customers' investments and the buyer-seller relationships that exemplify these investments.

Dual branding: how corporate names add value

The deference towards brands that motivated yesterday’s consumers to purchase is no longer so evident in today’s shopping environment. As consumers become more sophisticated in their assessment of brands and more demanding in their requirements, brand management will need to develop more substantive market models to regain the initiative. Outlines an empirical model of brand loyalty that provides diagnostic data to support the management of brand loyal behaviour and customer equity in grocery markets.