Thursday, November 19, 2009

Thinking of the Customer as an Asset

WE know that customer lists can be considered an asset and we also know that the net present value of a customer can be used to assess the value of a company. I think there is more to the customer than being on a list or looking at its net present value. Of course, the net present value makes sense because that value represents real dollars. What I am suggesting is that the net present value might need some adjustments to incorporate some of the complexities of customers.

There are at least 4 tangible assets on the balance sheet; namely, facilities, equipment, inventory and cash.
There are at least three intangible assets; namely personnel skills, name in the market, customer data base.

The customer asset has the following characteristics:
1. Highly complex
2. Changes value with time
3. Changes value with the size of the customer
4. Changes value with the level of support needed for the customer
5. Changes value with the age of the products/services offered.

The Oxford dictionary defines asset as: property available to meet debts; any possession; any useful quality.
My definition of the customer asset is: TREASURE. By this I mean the customer is precious; something valued for its rarity as a beloved or highly valued person.

What makes the customer an asset can be defined using the Oxford Dictionary definition; namely, customers are a form of property that provide revenue to meet debts and customers represent a possession without which there is no business.

The bottom line is that we need a better value of managing customers and I believe that looking at the customer as an asset may give us some insight that will translate into better customer relationships, increased loyalty and increased revenue and margins.

I think by viewing the customer as an asset of the company, the customer will be viewed more strategically. This perspective should translate into increased efficiency and productivity within the company.

I would appreciate feedback on this approach to analogizing the customer to an asset.

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