Calculating Customer Demand
Updated · Aug 26, 2010
Many organizations track and report customer demand by customer satisfaction scores. As mentioned in this new report on Destination CRM, the consequence of this type of measurement is that many revenue generating initiatives are based intuition and experience rather than evidence. Demand rating, however, is a way of representing customer demand for your product in a single number that can be analyzed and compared.
“Demand rating compares how much a customer uses a service to how much they pay for it-usage divided by contract value. Depending upon the offering, usage can be tracked as the number of sessions, downloads, transactions, storage, etc. and contract value is just that-how much the customer pays. The ratio between the two is quite potent, normalizing all the variables and resulting in a quantifiable indicator of demand for each specific customer.
“There are three, interrelated components for calculating a demand rating-usage (session data), contract data (terms of the customer relationship) and firmographics (the demographics of an organization.)”