JOURNAL OF SERVICE RESEARCH / August 2002Bell et al. / CUSTOMER EQUITY MANAGEMENT Seven Barriers to Customer Equity Management

The article reviews the evolution from brand-centered marketing to customer-centered marketing and the begin-nings of a focus on viewing the customer as an asset. It il-lustrates the practice by describing the use of a loyalty program to identify and respond to high-potential custom-ers in themarket for business-class hotels. Next, it considers seven challenges that impede wider adoption of customer equity management and concludes with a schematic model of customer-centered marketing management. The idea that marketing should be concerned with the profitability of individual customers is not new. Sevin (1965) laid out a method to compute a single customer’s profitability by allocating functional cost groups to specific customers and subtracting them from each customer’s an-nual revenue. Recently, however, the topic has been taken up with new vigor, as advances in point-of-purchase data collection and database technology have made it possible to capture and analyze not only the accounts of large cor-porate customers but also the purchase histories of house-holds and people in categories where annual per customer expenditures are quite small. New forms of data have in-spired new kinds of analysis. In its modern incarnation, in-dividual customer analysis looks beyond the computation of a single year’s profitability to the forecasting of the stream of profits attributable to the customer and the com-puting of a discounted present value. Customers come to be viewed as assets (Rust, Zeithaml, and Lemon 2000) or equity of the firm (Blattberg and Deighton 1996