Improving Shareholder Value Through Customer Equity

Customer equity functions in a positive perspective of the company, its offerings and its employees.  Customer equity has significant worth to companies that desire to encourage customers to continue to pay for products and services that raise shareholder value, firm growth and employment prospects. A study by Shultze, et. al. (2012) found that increases in customer equity have a larger impact on shareholder value. It is this shareholder value that is used for reinvestment for future growth and opportunities. 

Customer equity, marketing practices, and revenue are closely associated. When customers consider their total impressions of a company and its offerings they will naturally consider purchasing or not purchasing the product or service again. Customer equity raises the likelihood that they will make a decision to purchase again…and hopefully again and again. This correlation of marketing metrics, customer receptivity and stock value has been associated in a number of different studies making them loosely tied together (Srinivasan & Hanssens, 2009). 

Customer equity is forward looking trying to determine the financial value of retaining customers into the future. Sometimes this is three years and other times it may be a lifetime. The way in which marketing and the quality of the product/service the customers receives will naturally have an impact on whether they are retainable.  Retained customers are simply worth more in terms of ROI costs than new customers and create a base by which the company can grow. 

 Marketing effectively to important customers, maintaining a relationship with them, and servicing them well are important for retaining their patronage.  Many products and services have a shelf life and cycles that encourage repurchasing. For example, a person who likes cars may buy a new one every three years while a person who enjoys a certain food product may buy it every week. The lifetime value of a customer is its total value calculated out over a certain period of time. 

The researchers found that there is a 1.55 ratio of customer equity and shareholder value from data pulled from 2,000 companies over 10 years. In other words, when customer equity increases 10% it also has a 15.5% impact on shareholder value. Changes in customer equity and shareholder value are impacted by debt and non-operating assets. These concepts should be integrated into their analysis of value contributions from marketing actions. Using stronger customer metrics will help determining improvements in developing customer equity. 

Schulze, C. et. al. (2012). Linking Customer and Financial Metrics to Shareholder Value: The Leverage Effect in Customer-Based Valuation. Journal of Marketing, 76 (7). 

Srinivasan, S. & Hanssens, D. (2009). Marketing and Firm Value: Metrics, Methods, Findings and Future Directions. Journal of Marketing Research, 46 .

 

Call for Papers: 2014 Summer Global Symposium on Women Leadership

Date: July 25-26, 2014
Los Angeles, United States of America

Web address:
http://www.uofriverside.com/conferences/global-womens-leadership-symposium/

Submission of an abstract, topic of interest or proposal will be accepted for the purpose of registration. Time schedule to be determined later after all the papers have been received. 30 minute presentation per paper.

Topics:

Abstracts of research papers in 150-200 words are invited from female professionals, females of any age interested in career growth, men who are supportive of women in leadership, executives, supervisors, managers, administrators, educators and Ph.D. scholars/Post Graduate students on contemporary issues in Women's Leadership befitting any of the conference tracks mentioned below. Topics of interest for submissions include, but are not limited to:

-Gender and history

-Women in the university: benefits and barriers

-Market limitations

-Glass ceilings

-Trials and triumphs

-Economics of Gender

-Women at Work

-Women and social justice

-Women in the military

-Politics of gender

-Feminism

-Culture and progress

-Reproductive politics

-Women’s education demographics

-Women’s health, politics and the child

-Women’s rights and the law.

Changes and Opportunities in the Post-Recession Economy

The economy is adding jobs and that is great news. Unfortunately, the types of jobs have moved more into service sector and administrative positions that do not carry the same high wages as pre-recession employment. According to a report by the National Employment Project (NELP) low-wage industries have grown significantly since the end of the recession but this is leaving many Americans without significant savings. A mixed economic blessing that teeters between recovery and replacement.

Lower-wage industries have accounted for 22% of the recession loss but 44% of the employment growth over the past 4 years. It now employs 1.85 million more workers than it did in the past. Mid-range employment jobs lost were around 37% while recent increases are around 26% for a total of 958,000 lost. High wage losses include 41% and a 30% increase leaving us with a 976,000 fewer jobs.

The recession was longer than anticipated and even though the jobs have returned they have returned at a lower wage rate.  Since January 2008 to the low of 2010 the economy lost 8.8 million jobs while the study indicates that as of March 2014 a total of 8.9 million jobs have been raised. The positive news is that people are again finding various types of work in different sectors.

The study focused primarily on the private sector work recovery. However, government positions declined 627,000 jobs of which 44% were in education. Private sector work recovered in the service industry, the professional service and scientific industries, and private education and health services. The results for construction were mixed.

The changes also indicate an adjustment in the demographics of the country based upon global trends. Moving manufacturing to cheaper locations overseas impacts a major source of middle class income. There are efforts to raise the high tech sectors of manufacturing to create additional jobs and growth within the country. The use of higher skill and scientific work is one method of ensuring that processes and products are not easily copied or displaced.

The Boston Consulting Group released a report that the U.S. will soon reach parity with low cost manufacturers like China. This creates an opportunity to reverse trends in manufacturing losses and bring back a higher percentage of middle class jobs. However, this industry will need to push a larger section of the sector into the high technology manufacturing areas to develop the industry to a greater extent.

Highly developed manufacturing encourages mass manufacturing at a later date. New technologies that are cutting edge eventually make their way into mass distribution in the future. Innovation and development lead to greater opportunities that continually push manufacturing dominance. New products require a higher level of resources, science, strategy, and skilled labor that create first mover advantages that are later followed by lower cost copy cats.

The news is not all bad. The service industry is growing which means more people can find additional employment opportunities. A 2013 study confirms that employees can find greater pay increases within the service industry when compared with other low-earning lines of work. They may not start out high but they have opportunities to grow within this developing industry. The nature of the work is different than the past but the industry is budding and may someday come to full bloom.

Having employment opportunities across various sectors of society is important for people who desire to either move up within their careers, cross breed into other industries, search out various types of education, or attend training to raise their earnings potential. Diversity within the sectors also helps the U.S. maintain a competitive advantage in multiple arenas as well as maintain the potential as new opportunities rise. Ensuring and developing economic and human capital advantages in potential high growth areas keeps jobs at home.

The Report

Getting Your Vegetables with Easy Black Eyed Pea Soup

Black eyed pea vegetable soup is low in fat and chuck full of vitamins. This is an easy recipe to make requiring only a smidgen of your time. The benefit of the food is that it is 100% made from healthy ingredients that will further your fitness goals. Ensuring that you eat healthy in addition to working out is more than half the battle. 

According to a recent study printed in the British Medical Journal of 65,000 participants that a 7-10 servings of vegetables a day can reduce your risk of stroke by 25%, heart disease by 31%, and risk of death by 42% (1). This recipe can easily clear 7 servings without feeling over full. A serving is ¾ cups while a bowl could be as much as 2.5 cups of soup.

 Soups such as these come with additional benefits such as 150 calories a bowl with .1g of fat making it extremely beneficial overall. Most of us have busy lives but soups help cut down on preparation. Most soups are generally easy to make and once you have the majority of base ingredients it becomes cost effective. Cost and health should be two major concerns on your food budget.

Ingredients:

-4 15.8 oz Cans Black Eyed Peas

-1 cup mushrooms chopped

-2 16 oz cans diced tomatoes.

-2-4 cups vegetable broth (depends on if you want soup or stew).

4-cellary stalks diced.

1-large onion chopped.

-2 garlic cloves

-salt and pepper.

-1 cup brown rice

Directions:

Bring to a boil for five minutes

Reduce heat to simmer

For tender vegetables simmer for 40-50 minutes