What Is Average Equity?
The average customer equity method -multiply the average purchase amount per customer with the average number of purchases per year (or other time unit), and then multiply by the number of years (or other time) the customer has purchased the product from the enterprise (the customer's life cycle) unit). Divide the total sales by the total number of customers to get the average purchase per customer. Through the average customer equity method, it is a strategic customer segmentation method to identify which customers are the profit targets of the brand and which customers are unable to create profits for the brand.
Average customer equity method
Right!
- Chinese name
- Average customer equity method
- Foreign name
- The average customer equity method
- the way
- Customer segmentation
- Different
- Different accuracy
- The average customer equity method -multiply the average purchase amount per customer with the average number of purchases per year (or other time unit), and then multiply by the number of years (or other time) the customer has purchased the product from the enterprise (the customer's life cycle) unit). Divide the total sales by the total number of customers to get the average purchase per customer. Through the average customer equity method, it is a strategic customer segmentation method to identify which customers are the profit targets of the brand and which customers are unable to create profits for the brand.
- There are many ways to calculate the average number of purchases a customer makes each year, but the accuracy is different. You can divide the total number of purchases or other transactions by the number of customers, or you can calculate the number of transactions for all customers and then divide by the number of customers. The average customer life cycle can be used to determine the typical customer retention period.
- Explain
- For example, if 5,000 customers have purchased a product worth 10 million yuan, the average purchase amount per customer is 2,000 yuan (10 million yuan / 5000). On average, each customer buys twice a month, or 24 times a year. Customers can maintain relationships for an average of 5 years. Then the average customer equity is 240,000 yuan (2000 × 24 × 5).
- This is the simplest and most basic analysis method used to calculate customer value. Everyone in the company can understand the loss to the company by losing a customer in this way. Of course, the biggest disadvantage of the average customer equity method is that it does not take into account the cost, so it does not reflect the profitability of customers. The average of all profitable and unprofitable customers masks each customer's contribution to the company's profits and the cost spent on each customer.