Customer Equity is an essential metric in determining the value of a business. So what is it, and how is it determined?
Customer Equity
Customer equity is defined by how valued a customer feels not by how much that customer values a company. This value stems from a subconscious response to any engagement (“How did that make me feel?”), and is measured through the details of those engagements (customer service, product quality, website user experience, mobile accessibility, resources, etc). These aspects of customer engagement must meet or exceed expectations at every key point of engagement in order for a business’s customer equity to grow.
The strongest brands in the world—Apple, Disney, Starbucks—consider customer equity at the heart of everything they do. They understand that long-term success hinges on the ethos of customer equity. So how do businesses large and small fail at building customer equity?
Look Around
Waiting is the #2 customer complaint at most retail establishments. It has a negative impact on customer equity and revenue generation. Customers that wait 5-10 minutes become unsatisfied. This includes waiting to be greeted, waiting to be seen, waiting for service, waiting for delivery. Even if waiting is an understood part of a business, prolonged waiting has wide-ranging implications on a business’s overall success.
Several studies have shown that retailers lose as many as 30% of their customers from waiting. 96% of unsatisfied customers never complain. 9 out of 10 unsatisfied customers simply leave and don’t return. Why? Because time is a precious commodity.
Even though customers know that they have to wait from time to time, they view waiting as unproductive and wasteful.
Understand the Transaction
Knowledgeable companies understand the value of their customer’s time, and their negative perceptions of waiting. That’s why these companies offer goods and/or services in exchange for their customers’ time. Airports are now malls with restaurants and shops. Disneyland has interactive displays throughout the lines of every new attraction. Car dealerships offer big screen TVs, cafés, leather furniture, and kid rooms.
It’s well known that it costs 6-7 times more to acquire a new customer than to keep an existing one. Which is why it’s imperative that businesses compensate customers for both their money and time. The result of investing in customer equity is higher priced products, greater return business, and notable word of mouth advertising.
The preeminent, distinguished brand experience provides customers with positive distraction and relevant resources so that their wait time doesn’t feel like one.
Learn how to provide a fully branded, location-based experience at this session and attend over 100+ sessions, workshops and case studies at the 18th Digital Dealer Conference & Exposition from April 21-23 in Tampa, FL!
