Return On Customer
You Have a Hobby."
In their new book Return on Customersm, bestselling authors and renowned consultants Don Peppers and Martha Rogers, Ph.D. address today's most crucial business question: How do companies strike the right balance between maximizing current-period profits and building long-term enterprise value. The foundation of their findings is a customer-based value proposition that provides a practical and sound business metric to better manage your business – this quarter, this fiscal year, and for the foreseeable future.
Peppers and Rogers present a compelling case that long-term customer equity is an enterprise's single most valuable asset. In Return on Customer the authors provide a deceptively simple formula for measuring customer profitability and provide the tools for analyzing what the proper balance of customer attraction, retention, and in some cases loss, is for your company. Determining how best to create long-term customer value is central to any successful business strategy.
In addition to offering a unique growth strategy, Return on Customer can improve your company's everyday practices and provide a means to measure the results of those efforts. Peppers and Rogers offer insights from many of today's brightest business success stories to illustrate that understanding how individuals within your customer base differ in terms of needs and values, and that creating learning relationships along with other customer-focused efforts, has led Best Buy, Amazon.com, Southwest Airlines, and Costco to profitability.
Simply put: To maximize the value of what their customers do for them, these successful companies have placed maximum value on their customers. In turn, we can see that maximizing the value of the customer base is equal to maximizing the value of the enterprise.
Why Return on Customersm
After writing the successful and highly influential One to One book series, Don Peppers and Martha Rogers, Ph.D. had a somewhat radical idea. They started thinking about how customers can help businesses. They wanted to break away from previous theories and business strategies. In talking with many business leaders they realized that not everyone was thinking like they were. When they asked executives what the primary source of their revenue is, most answered that it is sales of their product. Too few realized that the ultimate source of their revenue is their customers—today and in the future. Don and Martha charged themselves with the mission to let executives know that every function across an enterprise, from hiring, training, accountability, etc. should revolve around their most valuable resource—customers.
Larry Kudlow, Host of CNBC's "Kudlow and Company," has offered highest praise for Return on Customer: "Finally! A business metric that can drive better management and a higher stock price. I predict soon you'll be hard pressed to find a company that isn't tracking ROCsm."
Read more industry praise for Return on Customersm
posted by 1to1 Gurus at 12:31 PM
9 Comments:
This sounds very interesting. I look forward to buying the book!
I'm just starting to read the book, and found your post via Technorati. Looking forward to seeing how the authors personalize and bring down-to-earth the Return on Customer concept, and what tools they provide for doing so.
I just want to congratulate you for publishing one of the best business books I have read in my life. I work in an industry that is characterized by poor customer service so I look forward to applying many of the concepts described in the book.
First I want to congratulate Don and Martha on an excellent book. After reading it the thought came to me that they were only looking at one side of the coin. The other side is suppliers. The same approach to customers (ROC)can be used for then (ROS). Doing so would grow CRM to VCRM (Value Chain Relationship Management). VCRM would work something like stakeholder management used by project managers. Six Sigma and Lean techniques could be used to create and sustain the growth in value. And Decision Analysis methodology could be used to improve the hit rate of initiatives. I say these things because this is how I create value for my customers and company. Return on Customer has done just what it says, growing the value of the customer, book buyers, and thereby growing the value of the provider, the authors.
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Great work on your blog - it was very enlightening. You've got a lot of useful info on there about Management Consulting so I've bookmarked your site so I don't lose it. I'm doing a lot of research on Management Consulting Exposed and have just started a new blog - I'd really appreciate your comments
Hi 1to1 Gurus, I was just blog surfing and found you! Wow, I really like this one.
It’s such a pleasure to read your post …. Interesting! I was over at another site
looking at planning techniques
and they didn't go into as much detail as you, but nonetheless interesting.
Can someone explain the math in the charts on page 12 and 13? I've gone through it six ways to Sunday and still can't make it work. I don't understand how you get the numbers for Year End Customer Equity. The only way you can get the exact numbers is to take Profit per Year and multiply it by six, then discounting it with the 20% rate. But that doesn't make sense. Also when I plug the appropriate numbers in Table 2 into the ROC formula, I get completely different results. I've talked to a couple of finance people and they can't figure it out either? Maybe it's my math skills, but it would be great to have a clearer explanation.
read the book
was very instructive and persuading but one question remains or one slight criticism - i understood well the ROC formula and its implications but why did you not provide further examples for establishing or calculating the customer equity as i did not grasp it well
best
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