Return on Customer

by Don Peppers, Martha Rogers

Internationally acclaimed business gurus and best-selling authors Don Peppers and Martha Rogers kicked off the CRM revolution and changed the landscape of business competition with their classic bestseller, The One to One Future. Now, in Return on Customer, they have written an even more revolutionary book, redefining the very concept of what it means to be “profitable” as a business. Virtually every manager agrees that a company’s most vital asset is its customer base – the lifetime values of all its current and future customers. Yet when companies track their financial results, they rarely take into account any change in the value of this critical asset. As a result, managers remain blind to one of the most significant factors driving genuine, lasting business success, and instead become preoccupied with achieving short-term financial goals. Return on Customer is the first book to focus on how firms create value, not just by driving current profits, but by preserving and increasing customer lifetime value. In a powerful blend of theory and practice, Peppers and Rogers demonstrate how to create shareholder value more efficiently by concentrating on Return on CustomerSM, a revolutionary business metric focused on a company’s scarcest resource – customers. By paying close attention to Return on Customer, companies can improve their profits while still conserving and replenishing long-term enterprise value. Relying on their years of experience working with many of the world’s leading companies, Peppers and Rogers take readers far beyond marketing, sales, and service. Return on Customer will revolutionize how companies think about their basic competitive strategy, product development efforts, and even the issue of business ethics and corporate governance.Return on CustomerSM is a registered service mark of Peppers & Rogers Group, a division of Carlson Marketing Group, Inc.“To remain competitive, you must figure out how to keep your customers longer, grow them into bigger customers, make them more profitable, and serve them more efficiently. And you want more of them.Unfortunately, the financial metrics you learned in business school are not easily adapted to account for the value companies generate from this scarce resource, with the right balance between current-period sales and customer lifetime value. But striking that balance is necessary if you want to know whether you’re better off investing in customer acquisition, or in product development, or opening new stores, or plant efficiency, or better qualified personnel, or more service, or cost reduction. While you may believe in your heart that a particular decision creates shareholder value, there’s no financial metric currently available to tell you how much shareholder value you actually created, or even whether you created any at all.But Return on Customer can help you. Return on Customer is a breakthrough financial metric that can quantify the actual shareholder value you are creating (or, possibly, destroying) with your various business actions and initiatives.” —from Return on Customer

Genres: Business

ebook

First published June 21, 2005

About the author

Recognized for well over a decade as one of the leading authorities on customer-focused relationship management strategies, Don Peppers is an acclaimed author and a founding partner of Peppers & Rogers Group, the world’s premier customer-centered consultancy.

Don’s vision, perspective and thoughtful analysis of global business practices has earned him some significant citations by internationally recognized entities. Business 2.0 Magazine named him one of the 19 “foremost business gurus of our times,” and Accenture’s Institute for Strategic Change listed him as one of the 50 “most important living business thinkers” in the world. The Times of London has listed him among its “Top 50 Business Brains,” and the U.K.’s Chartered Institute for Marketing included him in its inaugural listing of the 50 “most influential thinkers in marketing and business today.”

With co-author Martha Rogers, Ph.D., Don has produced a legacy of international bestsellers that have collectively sold more than a million copies in 18 languages. Together, their body of work includes books such as The One to One Future (1993), which BusinessWeek called “one of the bibles of new marketing”; Enterprise One to One (1997), which received a five-star rating from The Wall Street Journal; as well as The One to One Fieldbook (1999), The One to One Manager (1999); and One to One B2B, which made The New York Times business best-seller list within a month of publication in 2001. The authors have also published the first-ever CRM textbook for university use in graduate-level courses, Managing Customer Relationships (April 2004).

With Extreme Trust, they look to the future once again, predicting that rising levels of transparency will require companies to protect the interests of their customers and employees proactively, even when it sometimes costs money in the short term.

Reviews

[JP · Rating 2 out of 5]

Companies need to appreciate that customers are their scarcest, most critical asset. More important than the traditional financials is "Return on Customer," which equates to the impact on lifetime value for current and future customers. Companies underestimate the long-term impact of their actions on loyalty, engagement, referrals, and reputation. They did include one interesting financial example to demonstrate how repeat marketing to the same existing client base can turn from positive to negative ROI in just a couple years.

[Lori Grant · Rating 3 out of 5]

An optional-read book on customer services for knowledge workers, managers, executives, and entrepreneurs.

[Miguel Saenz · Rating 4 out of 5]

Highly recommend