Customer centricity starts with defining customer value

Share this post:

Customer centricity is a term often bandied about, yet its exact meaning can be hard to pin down. “You pick up three different books on customer centricity, and you get four different definitions about it,” writes customer-centricity expert Peter Fader.1

But one thing is certain: to be centered on customers, we need to know the value of a customer. Customer lifetime value – a critical measure in determining the value of all of an individual customer’s transactions – guides decisions about which segments of customers to focus on, when to invest in acquiring new customers, and when to focus on retaining the ones we have.
Even for customer-centric organizations that calculate and make decisions based on customer lifetime value, there can be disagreement. Do they include the value a customer brings by sharing positive sentiment about their brands in social media? How do they segment their customers so that they can isolate metrics like acquisition cost and revenue per customer for the segments they choose?2

There’s no single right answer, but a cross-organizational conversation about how to value a customer is an indispensable step in the marketing transformation journey.


Amy Bohutinsky

“The person who clicks on a Google ad and contacts a local agent is far more valuable than someone who may come to the site to check what how much their old boyfriend’s home is worth. If we’re going to pay for advertising, we’re going to focus on segments of traffic that we monetize.”


Tariq Shaukat
Caesars Entertainment

“The majority of spending in our resorts can be tied back to specific people and three-quarters of gaming can be tied back to specific players. That enables us to be smarter about what a customer might value and what personalized inducements we can provide.”


Kevin Cai
China Eastern Airlines

“We discovered that marketing and service talk different languages and they disagree on some very fundamental things, like who is our highest value customer? So, really, we needed to start by coming up with a common definition for most valuable. This has been difficult.”


1Knowledge@Wharton: Peter Fader on Customer Centricity and Why It Matters

2Forrester: Navigating the Customer Lifetime Value Conundrum

Related reading:

IBM Software: Business Analytics, “From Insight to Foresight: Using Business Analytics to Improve Customer Lifetime

More stories

Prediction Machines: To Fight Misconceptions about Artificial Intelligence, Clarity is Key

Cheap, ubiquitous, and incredibly valuable—that’s how the economists behind a new book about AI see the future of prediction, thanks to the technology that helps fill in the blanks. However, misperceptions about what AI is and how it works continue to prevail, even among tech-savvy marketers. In order for AI technology to achieve its full […]

Continue reading

Changing the World, One Website at a Time

Corporate social responsibility is important. Very important. With the ability for widespread internal communications and the advantage of robust organizational structures, corporations are poised to help in a big way. And it seems the timing is right to double down on CSR for two reasons: Consumers want to support brands with charitable missions (see: Toms […]

Continue reading

Thomas Marckx, Co-founder & Solutions Architect, TheLedger

Fireside chat at THINK 2018 with Thomas Marckx, Co-founder & Solutions Architect, TheLedger — moderated by Robert Schwartz, Global Leader of Agency Services, IBM iX. Subscribe to IBM thinkLeaders! Learn more about IBM iX

Continue reading