Skip to main content

Customer Equity and Loyalty with Cadillac - K.Bit - Business and Marketing

 ‘Customer Loyalty’, a very well heard term when it comes to brands or businesses. But what is ‘Customer Equity’? Putting it straight to facts, Customer Equity is the main goal of Customer/Brand Loyalty and Customer Relationship Management.


Customer Equity is the total combined lifetime value of company’s current and potential customer. Customer Equity can be a performance highlighter of company’s performance better than current sales, as it reflects the future. It is very economical to increase brand loyalty, as loyal customers are almost 5 times cheaper than gaining new customers. Loyal customers spend more. Losing customers can be costly because it results in losing not only current sales, but also losing a lifetime flow of revenues from that customer and many more customers that could’ve been brought by that one customer. This theory is termed as ‘Customer Lifetime Value’.

Starbucks and Lexus


Famous brands such as Starbucks and Lexus measure their customer lifetime values, with Lexus estimating it as $ 600,000 and Starbucks estimating as $ 14000, the value that these companies derive from one loyal customer. As a consumer of products, you do have to look at your value to these companies and how your loyalty is used to their benefits as well.


Cadillac - The Standard Of The World


During the period of 1970-80 Cadillac was defined as “The standard of the world”. It had very loyal customers. Cadillac’s market share in 1976 was 51% and company’s sales as well painted a rosy picture of the company. The customer equity of the company showed the actual picture. Customers of Cadillac were getting older thus customer lifetime value was falling. Cadillac didn’t target its cars towards the growing youth population. It failed to make its car cool for the upcoming generation of buyers. 

The New Cadillac Model

                    

Comparing it to BMW, it had younger customers and thus higher customer lifetime values. In recent times, in an effort to make Cadillac cool again among buyers it has labelled itself “The new standard of the world” with new ads targeting to ‘Dare Greatly’ and ‘Drive the world forward’ in order to compete with companies such as Audi and BMW.

Thus it is necessary to understand the importance of customer equity and customer lifetime values as much as current sales and current market share.

Follow On Instagram: @kbitblogs - Click Here

Comments

Post a Comment

Popular posts from this blog

Sensible Consumption And Marketing With Changing Economy - K.Bit - Business and Marketing

The COVID-19 pandemic along with health safety issues brought another glooming problem to our faces, the economic crunch having a direct impact on the pockets of regular middle-class consumers of our economy. The pandemic situation in 2020 which no one calculated for had stock markets world-wide chasing lower circuits day by day, with the greatest fall on NSE and BSE recorded at ~14% in one single day, making the investors poorer by lakhs of crore, which continued for days. The situation was dire, at one end people and the country as whole was fighting a global pandemic and other end people were locked at homes, away from their businesses and jobs, with unemployment rates soaring high in tight finances. This double-edged sword had people question their spending habits and what is necessity of living within our means. The Indian proverb – ‘ jitni lambi chadar utne paer failane chahiye’ had come into existence into every common man’s life all of a sudden. Just take a moment and think fo
Post a Comment
Read more

The Meaning of 'Marketing' and Insights - K. Bit - Business and Marketing

Marketing is the one function of business which involves engaging with customers more than any other business function. Successful companies are pioneers in marketing and fulfilling customer needs. Marketing of various companies at a glance: Amazon is the leader in online e-commerce platform by providing excellent buying experience to customers, Facebook has more than 1 billion active users as it has built itself into lives of customers by providing a easy medium to connect to people, Nike is the leader in sports apparel with its motivating ‘Just Do It’ marketing and Coca-Cola has almost world’s half carbonated beverage drink market share with it’s ‘Taste The Feeling’ attitude. Big companies spend hefty amount on marketing, that is how to they go from big to huge. People often tend to confuse marketing and advertising. Advertising is just a byte in gigabyte of marketing. Marketing has evolved from just advertising-informing-selling to understanding and fulfilling customer need
Post a Comment
Read more