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While certain executives are still calculating return on investment (ROI) for marketing spend, others are not focusing on campaign ROI, but rather on customer equity. For example, you offer a promotion on a product and you generate two times the amount spent, which appears to have a very positive ROI. However, let’s say that not one of those customers buys again. You have not retained one customer for a second purchase. Your customer lifetime value is low, there is little contribution to your customer equity and your retention rate is in the pits with this group of customers.

On the other hand, you offer another promotion in which you only break-even. However, every one of those customers orders again and again. And these customers continue to order for years to come. The result: your retention rate is high, your customer lifetime value increases and your customer equity is high as well. However, your ROI is very low.

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