Customer equity is:

Question

Customer equity is:

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Customer equity is the net present value of the predicted cash flows associated with a particular customer or segment, taking into account the customer's level of loyalty, potential for future purchases, and the costs of acquiring and retaining the customer. It is possible to calculate customer equity, although it requires accurate data and analysis. A high tech firm's most valuable resource may be its intellectual property, skilled workforce, or innovative products, but customer equity is still an important consideration. The cost to acquire new customers is just one factor in determining customer equity, which also includes factors such as customer lifetime value, acquisition costs, and retention costs. Customer equity can be calculated at the individual customer level, but it is often most appropriately calculated at the market segment level, where trends and patterns can be identified across groups of customers with similar characteristics.

Customer Equity Is