Home / Summaries / Class notes - Marketing Performance / customer-equity-ce

Rust et al. (2001): Driving Customer Equity: Linking Customer Lifetime Value to Strategic Marketing Decisions

12 important questions on Rust et al. (2001): Driving Customer Equity: Linking Customer Lifetime Value to Strategic Marketing Decisions

In which part of the roadmap fits this article?

It's about the measurement of performance on a customer level and the question how much money we make on each customer

So, the customer-level performance part

What facilitates Customer Equity?

Customer Equity facilitates the evaluation of marketing ROI, including

Return on service quality
Return on advertising
Return on loyalty programs
Return on corporate ethical standards

According to Rust et al. (2001), how can strategic competitive gaps be revealed?

In order to reveal strategic competitive gaps, a firm can measure its performance on the value, brand, and relationship drivers of equity and compare to its competitor’s performance on those drivers

For which kind of organisations are the following aspects of Equity most important?
Value Equity
Brand Equity
Relationship Equity

Value Equity is more important for B2B companies, for which objective performance is more important
Brand Equity is more important for consumer packaged goods companies and other transaction-oriented businesses
Relationship Equity is more important for relationship business (often service)

What is the main purpose of the paper by Rust et al. (2001)?

Showing how Customer Equity can be used to drive marketing strategy.

Explain the framework provided in the Rust et al. (2001) paper. What makes it possible to analyse?

In order to improve VE, BE and RE, the drivers for those need to be improved. This improves then the Switchting Matrix which improves the Customer Lifetime Value which improves CE.

This framework makes it possible to analyse what effect improving a driver of Customer Equity has on Customer Equity overall.

Which 6 benefits provides the framework of Rust et al. (2001) to management?

Identification and measurement of key drivers of Customer Equity
Identification of firm’s competitive strengths and weaknesses
Projection of financial impact of marketing initiatives
Key metrics for top management
Rapid implementation
Easy implementation

Which three broad areas influence customers' decisions to purchase and repurchase products and services?

Aspects of firm’s product and service offering
Aspects of firm’s brand, and
Aspects of customer’s relationship with firm

What is Value Equity?

Customer’s objective assessment of utility of a brand, based on perceptions of what is given up for what is received

Customer retention has been treated under one of two assumptions. Which two assumptions are those?

Lost for good assumption

Uses customer’s retention probability as probability that firm’s customer this period is still firm’s customer next period (once customer is gone, it’s gone) and

Always a share assumption

Customer does not give any firm all of his/her business (migration model, may leave and return).

What are the benefits and contributions of the Customer Equity Framework?

CE framework enable the firm to determine where to invest its marketing resources for the greatest impact
CE Framework enables marketing performance to be measured in terms of ROI, marketing performance is directly linked to CE.

CE framework makes it possible for firm to explore effect of customer satisfaction on CE.
CE framework makes CE and drivers financially accountable.

For which strategy provides Customer Equity the basis?

Customer Equity provides the basis for customer-centered strategy.

The question on the page originate from the summary of the following study material:

Marketing Performance

View summary

A unique study and practice tool
Never study anything twice again
Get the grades you hope for
100% sure, 100% understanding

Remember faster, study better. Scientifically proven.

Rust et al. (2001): Driving Customer Equity: Linking Customer Lifetime Value to Strategic Marketing Decisions

12 important questions on Rust et al. (2001): Driving Customer Equity: Linking Customer Lifetime Value to Strategic Marketing Decisions

In which part of the roadmap fits this article?

What facilitates Customer Equity?

According to Rust et al. (2001), how can strategic competitive gaps be revealed?

For which kind of organisations are the following aspects of Equity most important?Value EquityBrand EquityRelationship Equity

What is the main purpose of the paper by Rust et al. (2001)?

Explain the framework provided in the Rust et al. (2001) paper. What makes it possible to analyse?

Which 6 benefits provides the framework of Rust et al. (2001) to management?

Which three broad areas influence customers' decisions to purchase and repurchase products and services?

What is Value Equity?

Customer retention has been treated under one of two assumptions. Which two assumptions are those?

What are the benefits and contributions of the Customer Equity Framework?

For which strategy provides Customer Equity the basis?

Summaries related to Comparisons/linkages articles

Class notes - Marketing Performance

Class notes - Marketing & Innovation

Indian Economics

Global politics

Essentials of international relations

Behavioral genetics

Management and organisational behaviour

Follow Up Engels idioom 4/5 H

International Business

Marketing fundamentals

Projectmanagement, A practical Approach-Engl…

Basic Management Accounting for the Hospital…

For which kind of organisations are the following aspects of Equity most important?
Value Equity
Brand Equity
Relationship Equity