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Thursday, July 14, 2022

The Value of Customer Centricity: Listening with the Head, Heart, and Feet by Kanika Meshram * [43]


          The pandemic has upended how brands create customer value. As marketers continue to think what's new and valuable to customers, I have three brands that just got this right.

Ø  Airbnb, we all missed travelling during those dreadful lockdown periods. This meant Airbnb was nowhere near as popular as it used to be, but this brand differentiated their value position. They offered 100,000 stay places for healthcare workers and first responders around the world. They also waived all fees for healthcare workers [1].

Ø  Would we survive without in the early days of lockdown? I certainly did not. As a world leader in e-commerce, Amazon became the emergency anchor for those desperate to stock up on vital household goods and products to protect them from Covid-19, like hand sanitizer, face masks and disinfectants. How did they do this, read on.

Ø  Stagekings, an Australian live event stage design company, practically shut down overnight due to ban on public gatherings in the pandemic. Jeremy Fleming, the Managing Director of Stagekings decided to write an open letter to people. In his letter he wrote, “we want to keep our specialist tradespeople off the streets and our factor lights on, so tell us what is it that you guys need now that you’re stuck at home?’ His compelling open letter went viral and helped him launch IsoKings, a work from home furniture making company reporting a profit of 1.5 million in less than a year.  

If you look closely, all these three brands have an important connection—customer-centricity an almost difficult to define concept as it is to achieve. Lamberti (2013) defines customer centricity as putting customers’ interests at the centre of a firm’s actions. Yet, 85% of brands fail at achieving just that thus, value creation. [2] Let’s unpack this dilemma for a moment. Most brand have a customer centric value proposition defined as promise that summarises why consumers should buy a firm’s offering (Payne et al., 2017). But when the pandemic hit, something became very clear; most companies had shallow knowledge on their customers because of which they couldn’t adapt their value offerings quickly enough to cater to the evolving needs of their consumers.[3] Then, for those that were getting close to customers were accused of invading customer privacy. [4] But then how did Amazon, Air BnB and Stagekings managed to create a customer centric business model which is built on the heart, head, and feet?                         

Customer centricity starts from the heart, as does organisation culture. In case of Airbnb their business model delivers a welcoming and inclusive work culture throughout employee journey from recruiting and onboarding to physical facilities, and food. [5] In an anonymous employee satisfaction survey conducted by Glassdoor, 90% stated that they would recommend Airbnb to others. The company also significantly invests in creating partnerships between their employees, customers, and Airbnb host. Pre-Pandemic, the three co-founders of Airbnb consistently visited and stayed at the homes of key hosts around the world, an experience that likely built significant loyalty (Sundararajan, 2014). Thus, through Airbnb we learn the valued role of organisational culture in deploying empathy by walking into the shoes of the customers.                                                              

Another universal truth is that value is not just about winning customers’ hearts but also their head (or minds). Customers care about value —both price and time. Hence, in the lockdown period, Amazon leveraged machine learning to forecast when customers are going to place next order based on their buying patterns. According to David, the vice president of global customer fulfillment at Amazon, “machine learning models running in the background gave us different scenarios that allowed us to plan consumer spending patterns, when different cities conducted different styles of lockdowns.” [6]. Now not everyone knows how to use AI to interact with customers. But the benefit here is that customers are almost always interacting with AI. They look at their phones up to 150 times a day checking Facebook, comparing prices, researching travel, or paying bills. At any given moment a customer could be engaged in multiple interactions — transactional, personal, or even non-intentional. Some will be pleasant and entertaining, some rife with friction and frustration. But the key takeaway is that customer value creation is not only evolving, but increasingly fragmented and highly individualised. Which Amazon learned sooner than other brands.                                                                                                        

Finally, customer centricity should be the feet—the purpose of your brand existence. In market orientation literature, the underlying assumption is that a company is a repository of resources and competences. They develop products and services as their core value proposition, then the company acts on them or modifies the offer to meet customers’ expectations (Galbraith, 2002). But consider IsoKings, a brand launched out of desperation to survive the extensive lockdowns in Australia. From the outset, Jeremey Fleming had no money nor the inclination to use direct marketing to sell his furniture. Instead, he focused on direct communications with customers via social media and product reviews. Jeremy asked customers what furniture they needed, people would respond, we want a shoe rack and then 100 people would agree. So, he made a shoe rack. Then he had 1,000 people ask for a cat tower. So, he did a post and said if 400 people like or comment on this, we’ll make a cat tower and they did, so they did. Keeping customers at the core of their value delivery system IsoKings was able to expand his product line from a single work from home desk to 170 home furniture products in the lockdown period. Reflecting on these brand example, a critical learning curve for customer-centric business models is to create value by listening to customers from the head, heart, and feet.   


Galbraith, J. R. (2002). Organizing to deliver solutions. Organizational dynamics, 31(2), 194.

Lamberti, L. (2013). Customer centricity: the construct and the operational antecedents. Journal of Strategic marketing, 21(7), 588-612.

Payne, A., Frow, P., & Eggert, A. (2017). The customer value proposition: evolution, development, and application in marketing. Journal of the Academy of Marketing Science, 45(4), 467-489.

Sundararajan, A. (2014). What Airbnb gets about culture that Uber doesn’t. Harvard Business Review, 11. 

 Dr. Kanika Meshram is a Lecturer in Management and Marketing at the University of Melbourne. She may be reached at Professor Meshram has written this blog post from her research on customer centricity and interview with Jeremy Fleming from Stagekings, Australia.

Thursday, July 7, 2022

Designing Your Customer Engagement Strategy by Laura Patterson * [42]

How would your customers categorize their experience with your firm? A Forrester Research study that shared the findings from interviews with more than 4,600 U.S. consumers about their interactions with 133 companies across a variety of industries revealed that ONLY 13 firms received “excellent” ratings, while 45 were rated either “poor” or “very poor.” Clearly the results suggest improving customer experience and customer engagement will drive better business results.

Defining Customer Experience

Forrester categorizes the customer experience as the sum of three elements: meeting needs, being easy to work with, and providing customer enjoyment. The more complex your internal processes and the more interconnected technologies you have, the greater the opportunity to negatively impact the experience. Companies who are too internally focused, struggle the most with improving customer experience. To affect customer experience and engage customers you need to be a customer-centric organization. Customer-centric organizations evaluate processes, technologies, personnel, and decisions in terms of the impact on their customers and recognize that customer experience and engagement can be a valuable differentiator in the market.

Customer Experience

How do your touch points impact your customer’s experience?

Earn High Marks

Companies who achieve high marks for customer experience generally have invested in cross-channel alignment, established customer-centric metrics, and have a customer-centric culture. These organizations recognized that a positive experience is the responsibility of everyone in the organization. The organizations objectives, strategies and metrics are aligned in order to facilitate the customer experience.

Customer-centric companies have mapped all the customer touch points and are committed to improving touch point effectiveness. Studies suggest that few companies are good at mapping their customer touch points. Mapping customer experience across all touch points has a tangible impact on the ability to engage with customers. Companies who have mapped the customer touch point process feel this approach has positively affected the success of their customer engagement strategy. Mapping customer touch points is something any company can initiate.  Improve your touch point effectiveness with our Touch Point Effectiveness Workshop.

Four Key Elements to Delivering the Ideal Customer Experience

When it comes to metrics, customer-centric companies monitor customer metrics such as engagementloyalty, retention, growth, and on-boarding for new customers.  Research suggests that the ideal experience fulfills four key elements:

  1. Convenience: An enterprise needs to deliver on ease of contact, short wait times, through any channel the customer prefers
  2. Competence: Humans or self-service tools need to have fingertip access to all necessary information and be consistent across all channels
  3. Personalization: Companies and their web sites must recognize and remember the customer, and use existing information about them appropriately
  4. Proactivity: A company must proactively reach out whether by phone, text message, or other channels. The topics range from a simple follow-up to informing the consumer about relevant products and services (while still respecting the need for permission and being mindful of customer preferences).

While improving customer experience and engagement won’t cure all the problems your company is facing, it is a pivotal opportunity. Customers are becoming increasingly intolerant of poor customer service. Customer engagement is seen as being about creating relationships which result in value both for customers and for organizations. Research by E-Consulting and Cscape found that a customer engagement strategy increases long-term customer value and the value delivered to customers.

Develop Your Strategy

After you take a look at your current capabilities and map your customer touch points, you can begin to develop a strategy that will enable you to create the ideal experience and improve engagement with customers. To deliver an ideal customer experience, it is important to have a well thought out customer experience and engagement strategy. To be successful the strategy will need to address customer interaction in all its forms (web, phone, etc.), personnel skills, infrastructure to support customer-centric processes and data collection, business process, and customer-service and engagement data.

Laura Patterson is a marketing practitioner, consultant, writer, and speaker. Contact her at Also, check out Laura's other articles [22 & 38] on the Customer Value in the Now Economy blog.

Wednesday, July 6, 2022

What is Customer Value and How Can You Create It? by Gautam Mahajan * [41]


Value has many different meanings. To some Value means price (what is the value of this car?) to others it means benefit (the value I got from this car). It also means the worth of something. That is why you hear some people saying “value for money” (meaning they are price sensitive); and others who prefer “money for value” (meaning they are willing to pay for what they consider as benefits, as from a brand or a better product, or more convenience etc.)

The dictionary meaning includes: The regard that something is held to deserve; the importance, worth, or usefulness of something. Synonyms are: merit, worth, usefulness, use, utility, practicality, advantage, desirability, benefit, gain, profit, good, service, help, helpfulness, assistance, effectiveness, efficacy, avail, importance, significance, point, sense.

No wonder, the reader is confused about the value word that s/he uses so often. When used in the vernacular it does not matter, but when used as a technical term, like Customer Value, the meaning of Value must be precise, so that everyone understands what it means, as shown below:

Customer Value is the perception of what a product or service is worth to a Customer versus the possible alternatives. Worth means whether the Customer feels s/he or he got benefits and services over what s/he paid.

In a simplistic equation form, Customer Value is Benefits-Cost (CV=B-C).

What the Customer pays is not only price (cash, cheque, interest, payment during use such as fuel and servicing for a car) but also non-price terms such as time, effort, energy, and inconvenience).

The benefits include the advantages or quality of the product, service, image and brand of the company or the brand of the product, values, experience, success one gets in using the product and so on.

Values are distinct from Value (the plural of value as defined above is Value). Values are what someone or a firm stands for: Honesty, morals, ethics, sustainability, integrity, trust.

Consumers are distinct from Customers. Consumers use the product or the service, but in all cases do not buy the product/service. The value the consumer perceives influences the buying evaluation and perception of the decision maker or the Customer. The Customer is someone who buys or makes the decision to buy. A Non-Customer is someone who could buy from us, but is buying from someone else.

How is Value Created and What Does It Do?

Value is created just as much by a focus on processes and systems as much as it is by mind-set and culture. Mind-set and culture are much more difficult to change, and also difficult to emulate. It is easier to copy products and systems than to change mind-sets and culture. Therefore, for long term success, mind-set and culture are important and lasting. These, along with systems create great experience and value.

Value changes during the use of a product or during the Customer Journey. Value is perceived during the purchase intent, the shopping, the actual purchase or buying, the installation or start-up, the use and even the re-sale. We sometimes call this the waterfall of needs. Needs change during the Customer Journey.

Creating Customer Value increases customer satisfaction and the customer experience. (The reverse is also true. A good customer experience will create value for a Customer). Creating Customer Value (better benefits versus price) increases loyalty, market share, price, reduces errors and increases efficiency. Higher market share and better efficiency leads to higher profits.

How to Create Real Value

You first have to understand the Customer Value concept, what a Customer perceives as value, and how a customer’s value needs change over time, and how to get Customer feedback. You must realise that people buy a product or service that creates the most value over competing options.

To create real value, you must recognize what a Customer perceives as value. You must understand how the Customer views your competition’s product. What is important to the Customer in his buying decision? Is price more important or are benefits? Are you good at delivering what the Customer believes is important? Are you able to deliver more than your competition on these factors?

I understand these are general terms, but they will help you to create value as you understand your Customer’s need and perceptions. Let us take some examples on how to create Customer Value:

1. Giving a price that makes the Customer believe he is getting more than he pays for the benefits he gets versus competitive offers

2. Reducing the price, or keeping the same price and giving something extra over competition (this could be service, better attention, an add on to the product)

3. Making it convenient for the Customer to buy, and how he wants to buy and pay.

4. For B2B getting a proper price justification, not just a price.

5. For dealers, the feeling the company will grow and offer new products for the dealers to sell. These are things that the dealer may not have an experience of, but needs to Create Value

6. The image of the company, including the brand and the trust in the company or when the Customer appreciates the Values of the company including sustainability. These create Value for the Customer

7. Giving the Customer a product that works as it is meant to (as perceived by the Customer) and easy for him/her to understand and use (so that no unnecessary time or energy has to be expended)

8. Making the Customer feel valued. For example:

·         Smiling at and being attentive to a Customer creates value for him. Ignoring him/her destroys value for the Customer

·         Making it easy for the Customer to contact the company, and an assurance that an answer will be given when and how promised (how many times do you have to wait to talk to someone and how often does s/he promises to call back and how often do you get a call)

·         Not making you repeat questions or answers, and keep relating the problem

·         Receiving a call from a service person confirming his/her visit (the Customer is not kept wondering whether the service visit will take place)

·         Not answering queries destroys Value

All readers have real life examples of Value creators and Value destroyers and can add many more examples. Do add yours. Answer the following:

·         What could I do to create Value for my Customer?

·         What can destroy Value for my Customer?

·         Does experience create Value?

·         List things that you do not experience that can create Value for you.

·         Do I look for and solve customer problems not only one by one but also systemically for all customers having same problem.

* Gautam Mahajan is the President of the Customer Value Foundation and the Founder Editor of the Journal of Creating Value, He may be reached at: .  Article reprinted with permission of the author (218,740 views in Customer Think plus 27,529 downloads in 2021 at Journal of Creating Value alone). Contact for comments.

How to Stop Customers from Fixating on Price by Ajay K. Sirsi * [40]


In business-to-business settings, I often hear managers making unsubstantiated statements such as: 

  "We are too expensive"

·          " Our customers are so price sensitive"

              "All that our customers care about is the price”

             " We are pricing ourselves out of the market”

·          " Lower-priced competitors are taking business away from us”

These “truths” are often spoken in tones bordering on hysteria and hopelessness.  In this article, I will show you that these statements are not only false; rather, these myths take on a life of their own and become part of the organizational narrative, sapping business prosperity. 

I was at a shopping mall on the weekend and noticed something interesting.  All the high-end stores (read: expensive) had velvet ropes at the entrance, stopping customers from entering.  A hostess stood by the door, putting shoppers' names on a waiting list to enter the store.  I overheard one of them say to a shopper that the wait was 45 minutes.  At each of these high-end stores, the lines of consumers snaked around the corner, with shoppers waiting patiently to get in.

None of the middle-of-the-road brands (read: inexpensive) had such an arrangement.  Nor did they have any line of consumers waiting to get in.

The data show that consumers are spending money on high-end brands.  I asked myself what these expensive brands do to make consumers not care about price?  The truth is that these consumers are price insensitive because they receive benefits in exchange for the price they have paid.  These benefits are tangible (quality product) and intangible (prestige and status).  The high-end brands have done an excellent job of creating and communicating these benefits to their target customers.

Why can we not do the same thing in business-to-business markets?   

First, let me destroy a firmly entrenched misconception.  While it is popular to proclaim that all that customers care about is price, the research does not support this claim.  The research reveals that in B2B markets, price is never the most critical factor.  While price is not unimportant, customers prioritize other factors such as quality, delivery, reliability, after-sales service and support, and trusted partnerships.

Therefore, if a customer is fixated on price, it should tell you that you have done a poor job of creating and communicating the value of your offering.  Either your offering does not have the benefits desired by the customer, or you have done a poor job of communicating the value you are providing.  Let me add details to both points.

Creating Customer Value

In business-to-business situations, it is easier than in B2C markets to develop benefits for the customer.  In B2C purchases, some benefits consumers seek might be pretty nebulous.  These might include notions of status, prestige, and one-upmanship – factors that typically are not considered by B2B professionals (I have seen instances where these intangible factors are dominant even in B2B markets, but I will save that for a future article). 

Creating customer benefits is more straightforward in B2B markets because, in this space, customers only care about two things: reducing their costs and increasing their revenue.  Nothing else matters to them.  Every customer need and pain point falls into one or both categories.  Please review the table below to get a sense of the point I am making here.


Impacts Customer’s Cost

Impacts Customer’s Revenue

Purchase price



Availability of spare parts



Shortage of labor



Retaining employees



Operational efficiency



After-sales support



Supply chain issues



Building a brand



Getting more customers



I think you get the point I am making here. TBO, not TCO

To create value for the B2B customer, go beyond conducting a Total Cost of Ownership (TCO) analysis.  Instead, perform a Total Benefit of Ownership (TBO) analysis.  A TCO analysis only considers the customer’s total cost by incorporating the customer’s costs of acquiring, possessing, using, and disposing of your products.  A TBO analysis, on the other hand, combines both the costs and benefits the customer accrues from your product.  Read the related articles suggested at the end of this article for excellent examples of creating customer value.    

Communicating Customer Value 

Creating customer value in itself will not make your customers price insensitive.  The final step is to communicate the value you have created.  To do this, you must focus on quantifying the value you have created and providing tools to your sales force to communicate the value.

Value Quantification

It is not enough to tell a customer: “Our product is superior.”  Instead, say to the customer: “Our product lasts X% longer than the competitor’s; it consumes Y% less energy, and it enables you to do Z% more jobs in the same amount of time.”  Of course, these assertions must be based on unbiased data.  

Finally, provide your sales force tools to communicate the quantified value propositions quickly and easily.  I am surprised how many organizations I interact with fail on this score, much to the frustration of the sales team.  I put the responsibility of creating such tools directly on the shoulders of the marketing department.

Bottom line:  Customers do not fixate on price because it is their nature.  We make them behave like this by our failure to shift their focus to the value we are creating for them. 

Dr. Ajay Sirsi is an award-winning marketing professor and Director of the Centre for Customer Centricity at the Schulich School of Business, York University, Toronto. Visit Dr. Sirsi's website to learn more about his work on customer-centricity at:

Friday, June 24, 2022

How Customer-Obsessed Marketing Strategies Win in the Inflationary, Post-Covid Economy * [39]


Consider the current economic environment in the United States: gasoline $5 a gallon, inflation approaching 9%, huge price escalation in all consumer purchase categories, supply chain stockouts, the stock market in bear territory, a total lack of political leadership, and a recession imminent in the U.S. (This is not to say that things are great worldwide, as well). This market reality follows two-plus years of Covid lockdowns and restrictions. SMEs as well as giant corporations are facing unprecedented challenges in finding/keeping good employees and coping with large cost increases. Companies that survived fought back Covid and financial challenges by adapting to the new and difficult market issues and by being customer-obsessed.  

According to Forrester Research, a customer-obsessed enterprise “focuses its strategy, operations, and budget to enhance its knowledge of and engagement with customers.” They add that customer obsessed organizations are customer-led, insights-driven, fast, and connected. For further insights on customer obsession and Covid-19 responses, read articles 2 & 24 from the Customer Value in the Now Economy blog. 

Customer Value in the Now Economy: Customer Focus to Customer Obsession [2] (

Customer Value in the Now Economy: Rethinking Customer Experience Management in the Novel Economy by Brian Solis * [24] (

Chauvet Lighting manufactures lights and special effects equipment for venues such as concert arenas, nightclubs, theatres, and megachurches. Given the Covid-19 pandemic, like many businesses, Chauvet was forced to pursue new market opportunities such as drive-thru events such as concerts, comedy shows, and haunted houses. Other new ventures have included the production of social media content and educational videos targeting out-of-work lighting designers and repurposing video walls.

The global pandemic forced companies to rethink all business and marketing strategies to survive. This is particularly evident in the services sector which accounts for about 75% of the Gross Domestic Product in industrialized countries. Airlines, hotels, restaurants, retailers, small businesses, and universities are some of the industry sectors that had to quickly pivot to compete effectively in a new world slowly emerging from lockdowns and characterized by social distancing, contactless transactions, customers wearing face coverings, and virtual meetings.

Companies that were able to make this transition seamlessly in the Covid economy succeeded because they refused to fail and are truly obsessed about their business and customer base. They are willing to do whatever it takes even if it means struggling in the near-term to prosper over the long-term. Innovative universities offered blended learning which includes reduced capacities in the classrooms (20-33%), Zoom lectures, video recordings, and increased online instruction.

Restaurants provide an excellent case in point. Many “mom-and-pop” restaurants are micro-enterprises with twenty or fewer employees. They already are challenged by high costs (food, rent, equipment, etc.), labor concerns, local and federal regulations, and direct and indirect competition. Traditionally, they have one of the highest business failure rates in normal and good economies. In the Covid era, great food, superior service, and fair prices are no longer enough in determining winners from losers. A customer-obsessed mindset calls for adaptive and innovative business practices. Successful restaurants quickly embraced reduced indoor seating, outdoor dining options, curbside pick-up, delivery service, and contact-free credit card payments. In addition, they realized the importance of retaining existing customers and treating them as a special friend or family member, emulating Japanese style customer service. Other marketing tactics include new menu offerings such as family packs and comfort foods. Promotional strategies have to be more creative and often emphasize social media, price incentives such as BOGOs (buy one meal, get one meal free), and Covid-friendly giveaways such as branded face masks or trial-size hand sanitizers. One enterprising pizzeria even gave their customers a free roll of toilet paper with every pie ordered!  

Questions to think about

1.  Is your company customer naïve, customer aware, customer-committed, or customer-obsessed?

2. Explain specific ways that your marketing strategy is customer-obsessed?

3. How can your company become even more customer-obsessed to create exceptional value and compete successfully in the Now Economy?

* Art Weinstein, Ph.D., is the blogmaster and a Professor of Marketing at Nova Southeastern University. He may be contacted at

Friday, November 19, 2021

Customer-Centric Metrics Make Your Demand Generation Dollars Go Further by Laura Patterson * [38]


As one of the primary revenue generators for an organization, Marketing provides three essential roles: finding profitable customers, keeping profitable customers, and growing the value of these profitable customers. Customer-centric metrics offer a good starting point for identifying prospects who most look like your profitable customers, knowing which customers and products are making the largest contributions to the bottom line, and for effectively investing your demand generation dollars. 

Besides measuring customer satisfaction and loyalty, the impact on profitability is also an important measurement of any customer-centric strategy. Many companies have demand generation metrics and even measure customer satisfaction. Yet, we have found all too often that while companies say they are customer-centric, they have few customer-related metrics.

Most marketers agree that creating a satisfying customer experience positively affects a company’s profitability. The customer experience includes both rational and emotional aspects, as well as how the customer feels about the brand and the company, and what the customer thinks every time he or she interacts with the company. Having a positive impact on the company’s profitability translates into either increased revenue or some reduction in cost.

Ø Establish Profitability Targets - 3 Key Metrics

If you can calculate these three important customer-centric marketing measures, you can establish a set of customer profitability targets:

1.   Customer acquisition cost: Determined by calculating the average cost to acquire a new customer. See more below about how to use this measure in your demand gen efforts.

2.   Customer retention cost: Determined by calculating the cost to retain and serve an existing customer.

3.   Average customer profit: Determined by calculating the average value of each customer segment after accounting for standard costs.

You can monitor your success by measuring how well you are staying within your customer profitability targets for each of these metrics. You don’t need sophisticated tools to measure customer profitability. 

Ø Add Profitability Targets to Your Dashboard

Customer metrics are one of the primary categories that should exist on every Marketing dashboard. Once you have calculated these three customer-centric metrics you can set targets for each and report Marketing’s performance against the goal and Marketing’s impact on overall customer profitability on the Marketing dashboard. Overtime you will be able to use this data to determine which customers offer the best opportunities and focus Marketing investments on customers who will have the greatest impact on the bottom line.

Now that you understand which customers are profitable, you can apply this knowledge to determine which customer segments are worthy of your demand gen dollars.

Ø Customer Metrics to Guide Marketing Investment

When it comes to effectively investing your demand gen dollars, we recommend focusing on two customer-centric measures: customer value and cost to acquire. These measures when combined together can help your organization decide how much of your resources can be profitably allocated against a particular customer or set of customers.

The two customer-centric metrics we’re suggesting will help you identify the customers and/or segments to pursue. While it would be wonderful to be able to invest in every customer, most companies need to be selective.

We’ve simplified an approach to jump start your thinking process. You’re going to create a  2 X 2 grid with one axis being customer acquisition cost and the other axis being customer value.

Before you do these steps, decide which customers go where on the grid. Once you generate a list of all your customers, score each customer and/or customer segments for both customer-centric metrics.

1.   Create a Customer Value Score: To create a customer value score you will need information generated from two pieces of data: purchase frequency and customer revenue.

o    On the customer list table have a column for purchase frequency (you may want to use a numeric rating scale for this measure) and one column for revenue (you may want to create ranges for revenue and use a numeric rating scale for each range). Score each customer and/or segment. Customers who have high values on both columns (for example all customers who have either a 5 and 5 or 4 and 5 or 5 and 4 in the columns) would be your high value customers.

o    Those customers with a 5/5 would receive an overall score of 5, those with a 4/5 (frequency and revenue) you may want to give an overall score of 4.5 and those with a 5/4 (frequency and revenue) an overall rating of 4.

o    Do the same for each combination, with those customers with both a 1 in both columns having the lowest score of 1.

2. Calculate Cost to Acquire. For your same list of customers, in another column, calculate your cost to acquire each of these customers. Customer acquisition cost is the cost associated with convincing a customer to buy your product or service, including research, marketing, and advertising costs. It’s an important business and marketing metric that can be used to gauge marketing’s effectiveness.

  • Again, to keep things simple, create acquisition cost ranges and then assign a 1-5 rating scale for each range (we’d suggest using 1 as the lowest cost range and 5 for the highest cost range).

Ø How to Use Your Scores

For each customer or customer segment you should now have 2 rating numbers: a number derived for the customer value score and a number for customer acquisition.

Divide your 2  X 2  grid into 4 quadrants:

  • High Value/High Cost
  • High Value/Low Cost
  • Low Value/High Cost
  • Low Value/Low Cost.

Plot each customer into the appropriate quadrant.

Score Customers for Each Metric

> Score Customers for Each Metric

Those customers and prospects similar to them in the High Value/Low Cost quadrant are where you should spend the money.

Obviously very little, if any resources, should be allocated to customers and prospects in the Low Value/High Cost. You may have to have some internal conversations about the other two quadrants and applying the customer lifetime value calculation to these customers can often help guide decisions related to customers in these two groups. While it may take some time, this is a relatively easy and affordable first step.

Unless you’re among the few marketers who have all the time and money in the world to burn, we hope employing this analysis helps you decide how to eke out the most value from your limited and precious resources. You’ve probably already come to the conclusion that the best place to spend it is on those customers who are most likely to buy.  

Got the customer-centric metrics bug and want to know what else you should be measuring? Here the top eight measures often associated with companies truly committed to being customer-centric:

1.   Customer retention

2.                2. Buying frequency

3.   Contact frequency

4.   Churn rate

5.   Average revenue per user

6.   Customer lifetime value

7.   Share of customer’s wallet

8.   A customer’s EBITDA

Conduct a quick audit to see whether your company tracks any of these customer-centric measures. If it doesn’t and being customer-centric is important to your organization, then it may be time to revisit the metrics you are measuring.

 * This post was reprinted with permission from VisionEdge Marketing, Inc. 

Laura Patterson is a marketing practitioner, consultant, writer, and speaker. Contact her at Also, check out Laura's article "The Value of Investing in Customer Value Management" [22].  Post Editor: Preview (


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The Value of Customer Centricity: Listening with the Head, Heart, and Feet by Kanika Meshram * [43]

                        The pandemic has upended how brands create customer value. As marketers continue to think what's new and valuabl...

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