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Six Imperatives for Building Customer Equity

Six Imperatives for Building Customer Equity

John I. Todor

Customer equity leads to higher profits, higher lifetime value, and the powerful impact of word-of-mouth. Yet, most businesses are compelled to compete on price and convenience. Why? They lack customer equity and have no systematic process for building it.

Customer equity is the value of the relationship that exists in the customer’s mind – it’s emotional or psychological. When customer equity is strong, customers have a greater desire for the offering, are less price-focused, forgive snafus, seek advice on big picture issues, see the relationship as helping them deal with the future, and become advocates.

In today’s marketplace, customers are confronted with abundance, overwhelming choice and aggressive competition for their business. Consequently, most products are seen as roughly equivalent, and therefore are to be bought on the best trade-off between price and convenience. In this mindset, customers are indifferent to brands or relationships. No customer equity accrues.

The differences between most products are not meaningful to customers. It is through the experience the customer has buying and, especially, using the product that the customer gains value or meaning. Experiences create emotional and psychological reactions – negative, indifferent, or positive. The outcome of the experience lasts and impacts the relationship and customer equity.

The customer experience is the vehicle for building customer equity!

Six Ways to Build Customer Equity

1. Shift the Focus of the Relationship
A highly competitive marketplace encourages customers to buy on price and convenience. Yet, customers want trusting relationships. Relationships that deliver meaningful experience and help them deal with their issues. Truly trusting relationships simplify things for customers in an increasingly complex world. Yet, few companies deliberately nurture the right type of trust.

2. Put Your Offering in Context – One Meaningful to Customers
If your offering doesn’t fit with their context, customers will devalue it. Change shifts context and change is inevitable. Therefore, you must constantly seek to put your offering into a context meaningful to customers. Context gives meaning or value. Even commodities can be “de-commoditized” when they are put into a context meaningful to customers.

3. Turn Marketplace Stress and Anxiety into an Opportunity
Information overload, the uncertainty of change, and the stress of a 24/7, always on world push customers out of their psychological comfort zone. They have less predictability and control over the world they live in. When this happens, anxiety, confusion, frustration, and stress go up. To cope, customers procrastinate and become closed-minded and indifferent. This is not good for a company trying to persuade customers. Customers value and reward companies that help them return to their psychological comfort zone.

4. Ensure Employee Behavior Contributes, Not Detracts
Research indicates that nearly 75% of employees in America are at least partially disengaged when on the job. While they are physically present, they are at least partially psychologically absent. Their lack of engagement comes across as indifference to customers, and indifference is contagious.

5. Engage Customers Emotionally to Increase Desire
Customers will scrimp elsewhere to enable themselves to splurge on experiences that are emotionally and mentally engaging. According to Economist Intelligence Unit research, customer engagement is critical to sustainable profits and growth. Product and service quality is expected, and is the ante to get in the game. Get employees engaged and emotionally involved.

6. Expand the Experiential Envelope
Pull the emotional triggers that draw them into a positive experience. Birkenstock does this in display ads that show a comfortable shoe and claim “shoes that adapt to your feet, not the other way around.” Put your product into a broader and more meaningful experience. Sushi is just cold, dead fish, but that’s not the way it should be marketed or what creates customer desire. The customer experience has a powerful emotional impact. The experience can be expanded by including anticipation and reminiscence. Both are opportunities to reach customers emotionally, and increase desire.

Motivated, but want more specifics? Over the next several issues of this newsletter, I will deal with each of the imperatives in more detail, and provide examples of successful businesses to help you put these principles into action. In the last article in the series, I will provide a framework for integrating the six imperatives into an action plan.

John I. Todor, Ph.D. is the managing partner of The Whetstone Edge, LLC (, a customer-centric consulting firm that helps clients build customer equity by delivering compelling customer experiences. He is the author of, Addicted Customers: How to Get Them Hooked on Your Company (

[Photo courtesy of bizfluent.]