Customer Asset Management

The Idea

• Customer relationships are a key asset for every corporation. Yet, most marketing efforts are more centered on acquiring new customers than on managing the value inherent in existing relationships. Many frequency and loyalty programs are designed simply to speed up or simplify the transaction process. While this is worthwhile, we believe that Customer Asset Management is most effective when linked to proper measurement systems that track improvements in each aspect of the customer value equation.

• All customer relationships are not created equal.
  • Some are more inherently loyal and value long-term relationships.
  • Some are more profitable, spend more and require less service.
  • Some assign greater value to your products and services.
• To identify these value-based segments, it is critical to focus on customer behavior. Segmentation based on simple demographics is not effective.

• Customer Asset Value =
  Target Group * Avg $ per unit time * Share of Purchase Occasions * Gross Margin


• Example: Women's clothing retail loyalty program
  6 million * $275/quarter * 28% of occasions * 32%


• Customer asset value = $147,840,000 / quarter

• Loyal customers tend to have a higher average spend and share of purchase occasions. In addition, loyal customers may be more willing to pay a higher price, yielding greater margin, if they assign greater value to the brand. Loyal customers are more efficient transactors - create less burden on customer service systems.