| |
On
page 23 of the book we have an equation, the fundamental equation
of Customer
Equity™ which can
be used to compute a firm's total Customer
Equity™. Relative
to the other approaches, this equation is a more complex way
of computing total Customer
Equity™ across
all customer segments using different retention rate dynamics
for each customer segment. The left-hand side of the second
equality is improperly specified in the book. We have corrected
it below. Additionally, we have corrected a subscript in the
first equation.
Where:
CE
=
the current value of the firm's total Customer
Equity™
across all customer segments
CE(t)
=
the Customer
Equity™
value for customers acquired at time t
Ni,t
= the number of potential customers
at time t for segment i
ai,t =
the acquisition probability at time t for segment i
ri,t =
the retention equity probability at time t for a customer
for segment i
Bi,a,t =
the marketing cost per prospect (N) for acquiring customers
at time t for segment
i
BI,r,t =
the marketing cost in time period t for retained customers
for segment i
BI,AO,t =
the marketing cost in time period t for add-on selling for
segment i
d =
the discount rate
Si,t =
sales of the product/services offered by the firm at time
t for segment i
Ci,t =
cost of goods at time t for segment i
I =
the number of segments
i =
the segment designation
to =
the initial time period
k =
the time since acquisition
|
|
