Glossary

Customer equity

The value of a customer to a company is called customer equity. To determine this figure among others the turnover or potential sales of the customer, his image, his willingness to recommend the company to others as well as his future potential for development are assessed. To identify profitable customers companies have to estimate the customer value for the whole lifespan of the relationship with the help of the customer lifetime value concept.

The determination of customer equity enables companies to gear their marketing resources and overall performance increasingly towards their profitable customer categories. The creation of customer value is a prerequisite for increasing customer equity.