Customer Reviews

Customer Equity: Building and Managing Relationships As Valuable Assets

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Customer equity is clearly the name of the game and a hot topic in the business world right now, but I was hoping for a more up-to-date treatment. This book offers some fairly useful, but comparatively well-known and mundane, material about managing customer acquisition and retention, but the content advances little beyond Blattberg's mid-1990s Harvard Business Review article. I suspect that the third author (Thomas) may have done much (all?) of the writing, because the other two are heavily occupied by their consulting practices. There is some really cutting edge work going on right now in the customer equity/customer lifetime value arena, but this book does not reflect most of it.

Although there is not as much directly managerial material as in Rust et al.'s "Driving Customer Equity," this is still a thought-provoking read. I'm not sure the expenditure allocation stuff is really practical, but just thinking about things that way can be helpful.

This book joins Rust's 'Driving Customer Equity' as a leading book on the topic of customer equity. Although quite different in approach to the Rust book, this book provides an interesting alternative approach to trading off acquisition vs. retention of customers.

This subject is more often discussed than adequately understood. The authors of this book make a substantial contribution to our understanding of what customer equity is, why it is so important, how it can be created, how and why it should be leveraged, and how it can be increased. I commend them for beginning their book with "Customer Management: A Quiz." This requires the reader to test her or his knowledge by answering a series of questions, with answers to those questions provided in the chapters specified. The material is carefully organized within three Parts: A New Marketing System, Customer Strategies, and Managing by Customer Equity. The authors then provide an excellent appendix in which they address "Issues in Computing Customer Equity." They agree that you can't manage what you can't measure...or compute.

As explained in the Acknowledgments section, this book is the result of a process which began in 1975 when Blattberg "became aware of the value of the power and elegance of the concept of lifetime value of a customer." He and associates refined the concept within a business context to optimize the value of their customers through acquisition and retention processes. Years later, after a period of incubation, the concept was refined even more as a result of Blattberg's collaboration with Getz and Thomas, co-authors with him of this book whose basic premise is that "the customer is a financial asset that companies and organizations should measure, manage, and maximize just like any other asset." Customer equity management (CEM) is more than just a method for calculating the asset value of customer relationships. "It is a total marketing system" which requires integrative business strategies "that simultaneously manage products [and/or services] and customers throughout the customer life cycle and that reframe brand and product strategies within the context of their effects on customer equity."

As the authors explain, their book was written for CEOs and chief strategy officers, CFOs and accounting executives, marketing and sales executives, chief information officers, chief technology officers, human resources executives and knowledge officers as well as for account executives, public relations specialists, alumni officers, political representatives, clinical trial officers, not-for-profit managers, recruiters -- "in fact for anyone serving a valuable constituency." To the authors' list I presume to add CEOs of small-to-midsize privately-held companies and consultants who are privileged to serve any of those previously listed. The nature and extent of the book's value will obviously vary from one group to another; indeed, from what anyone within any one of the groups may need now and what she or he may need later. The authors provide what, in effect, is a cohesive, comprehensive, and cost-effective system by which to create and maximize customer equity. In process, there are dozens (hundreds?) of value-added benefits to be derived. The list of those for whom the book was written correctly suggests both the scope and depth of the positive impact which such a system can have IF properly designed, launched, and then developed.

No brief commentary such as this can do full justice to a book such as this whose content is so substantial and whose analyses are so penetrating. But I would like to discuss, briefly, one of its most valuable features: the ten "Tables" which are included. They range from "Features of the Brand Equity and Customer Equity Approaches" (1-1) to "Effects of Forces on Customer Equity" (10-1). The value of these Tables alone is well worth the cost of the book; you can thus imagine how much their "textual equity" (couldn't resist) is increased when correlated with the narrative. There are also dozens of check-lists throughout the book which help to summarize as well as emphasize key points.

In the final chapter, the authors shift their attention to the future of customer equity and offer this warning: "With the pace of change you face today, catching up will not be easy. Or, on a more optimistic note: If you can jump all the way to using customer equity as it will exist in the future, and change the rules of the game for your competitors as a result, you'll be very difficult to catch." Drucker has asserted that among the greatest challenges to be faced is managing a future which has already occurred. I agree. I also agree that the best way to "manage" that future is to create it...and do that now. Blattberg, Getz, and Thomas explain HOW with precision and eloquence. What are you waiting for?

Robert Blattberg has written a superb account on effectively managing customer relationships. At a time when CRM has been highly proclaimed as a solution towards improving customer relationships - we still struggle with how to actually measure and manage the effectiveness of those efforts, and how to frame the problem. With this book, and as a continuation of Dr. Blattberg's expertise on this subject, he has provided us with a very practical and essential framework for making the right decisions, based on the right measures of marketing efficacy and economic returns. I recommend it highly for those executives working in marketing, finance and strategic planning.

This new approach to marketing provides strategies, methods and metrics that all organizations can use. The authors explain that their system, called "Customer Equity," will show you how to organize and target your efforts to acquire and retain customers, and how to make additional sales to them. The book is divided into three sections - the concept, strategies and management - and is full of solid information and useful tools for measuring customer value. The authors supplement the main principles of each chapter with a business case, and present their concepts with real substance and clear thinking. We recommend this book to any marketer interested in the problems of modern competitiveness and marketing to customers in an information-saturated global marketplace.

I think the ideas the authors present in this book offer an interesting perspective on ideas that most in business will find familiar. That is, the core idea in the book is looking at your customer base as a valuable asset and carefully managing the ways you can influence your relationship with your company. The three core areas are customer acquisition, retention, and add-on selling. If that is all there was to the book, there would be nothing fresh here. We all know we need to acquire customers, retain customers, and make additional sales to the customers we have.

The authors help you focus on acquiring the right customers in the most cost effective ways. They offer insights on how to retain the right customers. Not everyone should be your customer, and not everyone who buys from you once should be your ongoing customer. I know, I find my chest tightening even as I type those words, but in reality they are indeed true. Some customers are too expensive to support and, no matter how you try, your product or service really isn't a good fit for them.

The add-on selling is also a nice section. It isn't just about selling more of what you sold them, or even selling them other products in your catalog, although that is part of it. You also need to think about extending the value of your brand and using the affinity your customers have for your expertise and the trust you have earned.

The customer balance sheet and flow statement are good mental exercises and management tools. However, they can never be accounting measures for a whole variety of reasons. Not that I think too many company managers or finance types would leap at using them anyway.

Reviewed by Craig Matteson, Ann Arbor, MI

Want to know about customer equity this is it, the definitive guide. Full of enough detail to put into practice, a revelation of a business book.

The central idea of a customer as an asset is clearly explained - with actual calculations! Then a framework is developed for putting the central idea into practice.

Almost unique amongst modern business books, this one shows you how to do something difficult in practice, it takes the trouble to show enough detail without being boring.

For more on same theme, try:
- Marketing and the Bottom Line (ISBN: 0273661949)
- Marketing Payback (ISBN: 0273688847)

The authors failed to account for value (or equity) being measured from the perspective of the customer (and/or other stakeholders such as employees). It is the percieved equity that a customer holds for the business that entices them to maintain a relationship. It is specifically that equity that businesses should focus on. By studying the dynamics of 'that' equity they can better determine what individuals value and focus resources (where applicable) on making sure the equity is either preserved (elimination of barriers) or enhanced (by exceeding expectations).

Businesses don't exist because they have something to sell. They have something to sell because someone is willing to buy it...they need to spend more time figuring out 'why' and enhancing that aspect of the relationship. It's a 'draw' not a 'push'.

Based on the title I thought they had it right. They didn't.

Although this book is well written, it fails in delivering any new insights, ideas, or analysis. Everything in this book has been tossed around and discussed by both practictioners and academics for atleast three years. Perhaps his book would have been useful a few years ago. The treatment is less rigorous than that by Ronald Rust etc. and it also doesn't go much beyond what they already said in there in book.