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The Customer-Base Audit

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The Customer-Base Audit

The First Step on the Journey to Customer Centricity

Wharton School Press,

15 min read
8 take-aways
Audio & text

What's inside?

A limited understanding of your customers affects profits – transform your business with a customer base audit.

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Editorial Rating

7

Qualities

  • Comprehensive
  • Applicable
  • Concrete Examples

Recommendation

If you lack clarity about the number of unique customers you have, the health of your customer base and who your highest value customers are, you’re not alone, say Peter Fader, Bruce G. S. Hardie and Michael Ross. Many businesses have a 2D view of their profits and revenues, and fail to properly consider the additional and vital dimension – customers. Learn the basics of conducting a customer-base audit, which will empower you to spot problems and opportunities before they arrive while gaining a more complex understanding of the customer behaviors behind the numbers.

Summary

Many firms lack clarity on who counts as a customer and customer statistics.

How much do you know about your customer base? Do you know which products appeal most to your highest value customers? Do you know how many first-time buyers plan to make a second purchase or how your customers differ in the value they bring your firm? If you’re like most senior executives, you probably can’t answer these questions offhand. Most organizations lack adequate reporting structures and systems, reflecting a failure to truly embrace a customer-centric mind-set. Fortunately, a “customer-base audit” can help you develop a vital understanding of your organization’s profit and revenue streams while guiding the creation of a healthy growth strategy. 

When beginning their customer-base audit, many executives cannot even agree upon what constitutes a customer. For example, is someone who uses a platform’s services, such as Google, a “customer” or simply a “user” if they’re not subscribing to premium paid services? When coming to a consensus about whom you view as a customer, consider details such as:

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About the Authors

Peter Fader co-founded Theta, a firm working to revolutionize finance through customer-based valuation, and the Frances and Pei-Yuan Chia Professor of Marketing at the Wharton School of the University of Pennsylvania. He is the co-author of The Customer Centricity Playbook (2018). Bruce G. S. Hardie is a marketing professor at the London Business School. He develops tools to analyze marketing and customer data. Michael Ross is the senior vice president of retail data science at EDITED, and a non-executive director at Sainsbury’s Bank, N Brown Group and Domestic & General. He has co-founded businesses such as Dynamic Action and eCommera, and served as a consultant at McKinsey & Company.

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