Measuring Marketing

Chapter 35 Customer Brand Value

Measurement Need

Marketers need to determine the approximate value of the average customer to their brand.

Solution

$CBV=P\times BR\times SOP\times M$

Where

CBV = customer brand value

P = penetration (% of the brand’s users vs. overall # of users in the category)

BR = buying rate (the average # of units bought per customer during a specified period of time)

SOP = share of purchase (i.e., share of customer wallet)

M = gross contribution margin

To illustrate, an app developer for smart phones and tablets has the following data:

P = .12 (12%)

BR = 4 (4 apps are purchased per year from a single customer)

Share of purchase = .025 (2.5%

Gross contribution margin = .6 (60%)

CBV = 0.12 × 4 × 0.025 × .06 = 0.0072

In short, the customer ...