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Definition

Customer equity

The ultimate aim of customer relationship management is to produce high customer equity.

Customer equity is the total combined customer lifetime values of all of the company’s current and potential customers.

As such, it’s a measure of the future value of the company’s customer base. Clearly, the more loyal the firm’s profitable customers, the higher its customer equity.

Customer equity may be a better measure of a firm’s performance than current sales or market share.

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