I am using Customer Equity to define the relationship value a company accrues from its interaction with its customers. Customer equity is the emotional and psychological variable that underlies customer desire and their desire for authentic relationships with companies that both stimulate desire and help them pursue it.

This might sound a little esoteric. Here’s why it is important to businesses in virtually every arena. Today’s customers are reaching a saturation point for “things” and they treat “things” with indifference, as indistinguishable commodities to be bought on price. Indifference is akin to apathy and who wants apathetic customers? There is no desire and the potential for loyalty and high customer lifetime value is extremely limited. Unfortunately, most businesses are optimized to sell “things”.

On the other hand, when the experience enabled by an offering has meaning to customers, it is because the experience engages them emotionally and psychologically. Customers can satisfy their basic needs with commodities but they can only satisfy the fundamental human need to desire through emotionally and psychologically gratifying experience.

Companies who have learned to facilitate and support customers in this pursuit are building customer equity and the sustainable profits and growth that follow.

AARM’s Customer Equity Initiative is designed to help companies in any fields, including B-to-C and B-to-B, learn how to optimize their business practices to deliver what today’s customer value and accrue Customer Equity.

As the President of an Association for the Advancement of Relationship Marketing for the past decade plus, I have had the opportunity to observe and contemplate many “interesting - leading-edge” efforts in Relationship Marketing and CRM. At the same time I have witnessed the realities of putting these ideas into action.

Recently, I have sensed that the big picture has drifted out of focus. It’s like six blind men feeling different parts of an elephant and coming to completely different conclusions about the animal’s shape.

For the last several months, I have been on a serious search for a coherent view of the Big Picture - a view that simultaneously acknowledges the challenges facing both businesses and their customers while providing a framework that turns these challenges into sustainable opportunities.

During my search, I’ve been talking to a lot of executives all over the world, trying to reconcile what the gurus, thought-leaders and innovators are concerned and talking about relative to the realities faced by business people in the trenches.

What are these business executives saying? “It is increasingly difficult to gain and sustain profitability and growth!”

The emphasis is on sustain!

The Root of the Problem.

As the futurist Alvin Toffler said, “Whatever you did to get yourself where you are, won’t keep you there!” Rapid change has forced businesses to deal with new challenging issues. Unfortunately, many business strategies are short-term solutions that are counter-productive to long-term success.

A number of thought leaders I talked to argue that there is a growing disconnect between what businesses are good at serving up vs. what today’s customers value. This misalignment undermines sustainable profits.

But, it also opens doors to opportunity.

In this era of abundance and overwhelming choice, we know that customers respond to experiences, not things. Yet businesses have been optimized to make and sell things. As “commoditization” accelerates, many businesses focus on efficiency, which lowers costs but has a number of detrimental consequences.

Firstly, it undermines the customer experience.

Secondly, it fosters a win-lose dynamic between employers and employees. This, in turn contributes to disengaged employees who can severely downgrade the experiences of customers.

Sustainability requires win-win-win relationships between customers, employees, and companies. To achieve win-win-win, the end games of all three parties must be compatible.

For the last six months, I have found myself increasingly intrigued by the ideas of John and Bill Todor, distinguished academics and Ph.D.’s. They are partners in a consulting firm headquartered in California.

Recently, I flew out to the west coast and spent several days talking with and interviewing John about his new book, Addicted Customers: How to Get Them Hooked on Your Company. (I believe John's insights are so important that these interviews have been transformed into an audio CD series now available on this website under Information Products.

John’s book clearly spells out the psychology of customer experiences—what it takes to have emotionally and psychologically gratifying experiences—experiences that lead to enduring customer desire. Bill’s upcoming, parallel book, Addicted Employees, focuses on the employee component of the triadic relationship. Together they deal with what companies need to do to foster win-win-win relationships. I genuinely believe that these guys not only bring the big picture into focus, they have articulated a framework for action.

I am very pleased and excited to report that I have convinced The Whetstone Edge partners to become the cornerstone of AARM’s new Customer Equity Initiative to help companies build customer equity. Working with AARM appeals to their professional backgrounds in both business and academia. John and Bill love to teach, educate and share their insights. Most importantly, they enjoy seeing their insights turned into action. We all agree that this new AARM initiative is another way to make this happen.

What makes their approach so unique and compelling is not merely their academic credentials and business experience. For the past fifteen years, they have deliberately immersed themselves in the challenging, day-to-day struggles of a wide variety of businesses, and then backed away to focus on the big picture. I am excited to be associated with both of these individuals and eager for you to get to know them. Most importantly, we believe that AARM’s new initiative will help you and your company build customer equity—the wealth creating potential that lies in a company’s relationship with its customers.

With this initiative we are taking the position of a cross between a think tank and educational center, all related to helping companies build customer equity. I invite you to join us in this ongoing journey. For starters download a free paper by John and Bill Todor or one of the other thought leaders. And, there will be more of these to come. Certainly, check out the various events and offerings. What you see today is just the beginning.

Sincerely,

Robert T. Stacey
President - AARM