Customer equity, a comprehensive approach in measuring marketing performance

One of the basic problems that marketing as business logic has been facing is related to impossibility of precise measuring of the marketing activity effect. Namely, many distinguished authors expressed their assumption that it is impossible to measure performance of marketing activity, having in mind that most of them have short term and long term impact on overall business. This might be one of the reasons for a decrease of importance of marketing at the company level during the last decade of XX century. In order to overcome this problem, a new approach in measuring performance of marketing activity and its impact on business result has been developed – customer lifetime value and customer equity. There are several more reasons for shifting toward this approach. First, marketing managers are under increasing pressure to be more accountable for their decisions. Second, emerging technologies have enabled firms to personalize products, services, marketing communications and even prices. And the last, but maybe most important factor is the great amount of information that companies gather regarding their customers thanks to CRM systems. According to this approach, customer are seen as a part of company asset, enabling therefore quantifications in marketing easier to use for the accounting and financial needs. In this paper,the authors will provide ways to increase customer lifetime value and customer equity and propose a more comprehensive way to measure those.