Customer Equity is the value of the relationship that exists in the customer's mind—it's emotional or psychological. When customer equity strong customers have a greater desire for the offering, are less price focused, forgive snafus, seek advice on big picture issues, see the relationship as helping them deal with the future and, they become advocates. John I. Todor, Ph.D., Addicted Customers: How to Get Them Hooked on Your Company, 2007.

Six Imperatives for Building Customer Equity

Customer Equity leads to higher profits, higher lifetime value, and the powerful impact of word-of-mouth. Yet, most businesses are compelled to compete on price and convenience. Why? They lack customer equity and have no systematic process to build it.

In today's marketplace customers are confronted with abundance, overwhelming choice, and aggressive competition for their business. Consequently, most products are seen as equivalent and therefore are bought on the best trade-off between price and convenience. In this mindset, customers are indifferent to brands or relationships. No customer equity accrues.

Product differences are not meaningful to customers. The experience the customer has buying and using the product creates value and meaning.  Experiences create emotional and psychological reactions that can be negative, indifferent or positive. These reactions last and impact relationships and customer equity. Customer Experience is the Vehicle for Building Customer Equity.

Six Imperatives for Building Customer Equity

1. Shift the Focus of the Relationship

A highly competitive marketplace encourages customers to buy on price and convenience. Yet, customers want trusting relationships. Trusting relationships deliver meaningful experiences and help deal with issues. Truly trusting relationships simplify things for customers in an increasingly complex world.  However, few companies nurture the right type of trust.

2. Put Your Offering in Context—One that is Meaningful to Customers

Customers devalue offerings that don't fit with their context. Change shifts context and context gives meaning or value. Since change is inevitable you must constantly seek to put your offering into a context meaningful to customers. Even commodities can be "decommoditized" when they are put into a context meaningful to customers.

3. Turn Marketplace Stress and Anxiety into an Opportunity

Information overload, the uncertainty of change, and the stress of a 24/7, always on, world push customers out of their psychological comfort zone. They have less predictability and control over their world. When this happens, anxiety, confusion, frustration, and stress go up. To cope, customers procrastinate and become closed-minded and indifferent. This is not good. Customer's value and reward companies that help them return to their psychological comfort zone.

4. Ensure Employee Behavior Contributes and does not Detract

Research indicates that nearly 75% of employees in America are at least partially disengaged when on the job. While they are physically present, they are psychologically absent. Their lack of engagement comes across as indifference to customers and indifference is contagious.

5. Engage Customers Emotionally to Increase Desire

Customers will scrimp elsewhere to splurge on experiences that are emotionally and mentally engaging. According to research by the Economist Intelligence Unit, customer engagement is critical to sustainable profits and growth. Product and services quality is expected. It is the ante to get in the game. Get customers engaged and emotionally involved.

6. Expand the Experiential Envelope

Draw customers into a positive experience by pulling their emotional triggers. Birkenstock display ads show a comfortable shoe and say "Shoes that adapt to your feet, not the other way around." You can also put your product into a broader and more meaningful experience. Sushi is just cold, dead fish but that's not the way it should be marketed or what creates customer desire. The customer experience has a powerful emotional impact. The customer experience includes anticipation and reminiscence. Both are opportunities to reach customers emotionally and increase desire.

Want more specifics? John is writing a series of articles that deal with each of the imperatives in more detail and provide examples successful business to help you put the principle into action. In a seventh article he will provide a framework integrating the six imperatives into an action plan. Click here to receive these articles.

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Addicted Customers: How to Get Them Hooked, Customer Management magazine, December, 2006.

This is our most popular paper in 2007. Download your copy.

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We can help! Interested in jumpstarting your company's initiative to build Customer Equity? We are available for keynote speeches, seminars, executive briefings and in-depth custom workshops. To learn more download Customer Equity Programs. __________________________________________________________________________

For additional information on building customer equity, check out John's new book, Addicted Customers: How to Get Them Hooked on Your Company, go to www.AddictedCustomer.com.

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