Customer-Base Audit

Executives spend a great deal of time with income statements, budgets and monthly reports, yet rarely stop to consider that every dollar of revenue comes from a real person choosing to buy. Written by Peter Fader, Bruce Hardie and Michael Ross, this book, subtitled The First Step on the Journey to Customer Centricity, is meant to start leaders on understanding those buyers, their habits and the overall health of the customer base. The authors define a customer-base audit as a systematic review of how a firm's customers buy, using data recorded by the company's transaction systems.

The book is organized around questions a leader might ask about the business. How healthy is the customer base? Are growth targets realistic? How do customers differ in their behavior and their value? How has the quality of the customer base shifted over time? Which changes in customer behavior explain swings in company performance? What matters most to the most valuable customers, and which products attract and keep the best of them? To address such questions, Fader, Hardie and Ross present five "lenses" that an executive can use. They point out that the answers are usually spread across different parts of an organization, and that it is uncommon to find all the relevant analyses in one place, let alone run on a regular basis as a true audit would require. Without a basic, systematic understanding of the foundation of a company's main source of cash flow, the authors ask, how can executives make informed decisions?

Fader, a Wharton professor, is also the author of Customer Centricity and a coauthor of The Customer Centricity Playbook, both of which address how businesses relate to their customers. In this book, he and his coauthors help leaders build a foundational understanding of customer buying behavior and, through it, of the company as a whole.