Are many companies currently using the lifetime customer value model?
Peppers: According to most surveys, only about 20-25% of companies make any attempt to measure lifetime customer value. Rogers: More importantly, some of the measures that are in use can paint a false picture. Some companies correlate customer equity directly with satisfaction scores. Although customer satisfaction can help determine lifetime value or even customer equity, it certainly is not something we like to rely on all the time. Peppers: Yeah, you’re feeling the tail to deduce that it’s an elephant. McLaughlin: How do you determine the lifetime value of a customer? Rogers: Instead of reporting where you’ve been, we predict where you’re going to be. We don’t just look at the past—how much your earnings were this quarter, or what your same source sales were for the past quarter as compared to the same period last year. We want to know how much your customer base is going to be worth. We hold people accountable not only for current revenues but also for the changes today in the futu
