Customer equity: brands are still getting it wrong

Customer equity, or the profit-based lifetime value of your customer base, is where your firm derives its value. But today’s marketing departments are not always well organised enough to manage this critical metric.

All too often, customer and brand experience are managed by separate teams in organisations. We think this has to change, given that a customer is a recipient of both the customer experience and the brand strategy.

The person who sees your ads is the same person who visits your store, interacts with you virtually and experiences your offerings. Therefore, it is crucial that businesses better integrate brand and customer experience management to build more sustainable customer equity.

New challenges, old thinking

Most companies manage their brands and customer loyalty programmes in a linear fashion, in part due to the structure of their organisations, which tend to silo management teams looking after separate parts of the brand and customer experience.

So they talk confidently about experience management, yet still employ “satisfaction” tools and traditional thinking – namely that delivering a higher-quality product or service makes customers happier, more satisfied and loyal. This classical understanding of customer satisfaction and loyalty grew out of the quality-management revolution of 1980s and still persists within many companies.

Similarly, the brand funnel, so often viewed as a silver bullet, really is now an out-of-date view of how consumers progress through different states from awareness, to interest, to desire, to myriad actions. This thinking follows the same recognisable linear error and paints a fundamentally misleading picture of the customer journey.

The discourse in both brand and customer experience circles, both academic and in practice, has largely accepted that today’s customer journey is not linear.

Success in the new reality

Speed and transparency of the data revolution has revealed the linear path or funnel doesn’t capture the real forces that drive consumer behaviour. Loyalty has changed and so has our relationship with customers.

The consumer economy has evolved well beyond the realm of products, services and brands into the age of experiences and the relationships built over the consumer journey with a brand. Technology has transformed, and continues to transform at an accelerated pace, not just consumers’ lives, but also the business realities of the companies vying for our attention.

We understand our customers’ behaviour and performance better than ever and we know much more about them, thanks to our ability to transform big data into smart data. This greater connection enables us to take a longer view and has altered the dialogue between consumers, the product and the brand from a uni-directional dialogue to a bi-directional one.

To be clear, we need a fundamentally new approach to understanding and managing loyalty to be successful in the new reality.

It’s no easy task. According to the CMO Survey 2015, almost 70 per cent of all companies continue to organise by product or service groups rather than customer groups. This makes it difficult to deliver on critical customer equity-focused objectives, such as increasing customer purchase frequency, cross-selling opportunities and new markets across existing silos of products, services and often brands within the same company.

Awareness, image, quality, satisfaction, loyalty and other singular functions must be combined into a more integrated and dynamic organisation, putting the customer at the centre

Leading companies are starting to leverage marketing and customer management technology, such as customer relationship management, predictive analytics and micro-targeting, to engage customers at each stage of the relationship or journey.

So where to begin if evolution is a more realistic, albeit less lofty, goal than revolution? For starters, we strongly encourage companies to consider more integrated approaches for understanding and monitoring their brand management and customer management strategies and initiatives.

At the centre of this rapid shift is the focus on building customer equity of which products, services, brands, experiences and customer relationships are all an instrumental components.

Brand management and customer management silos must be taken down. Awareness, image, quality, satisfaction, loyalty and other singular functions must be combined into a more integrated and dynamic organisation, putting the customer at the centre.

The focus needs to shift to creating brand, product and customer experiences that leave a positive, memorable emotional imprint. Companies need to orchestrate these experiences dynamically across the customer journey to build relationships and stimulate them to grow. Finally, they should use data integration to increase the speed and effectiveness of actions in the marketplace.

In following this shift, successful brands will manage new mobile, social and customer experiences in a more integrated and customer-centric way, moving beyond products and services to experiences and durable, long-term relationships. In our experience, this ultimately drives companies’ bottom line and sustainable growth.

For more information contact Andrew Warden, global director, Product 

Marketing at 

or visit