A Valuable Lesson in Marketing from Cadillac

Cadillac had a big following back in the 1970s and 1980s, with some of the most loyal customers in the industry.

Understandably so.

The Cadillac brand was defined as “The Standard of the World.” In 1976, its share of the luxury car market reached 51 percent—a peachy picture all around.

But from another vantage, the picture was bleaker.

When looking from the angle of customer equity, it became clear that Cadillac’s customers were getting older, and the average customer lifetime value was falling. At the time, the average age was 60, with many Cadillac customers purchasing their last car.

Meanwhile, BMW was winning with younger customers—who were at an average age of 40. This gave BMW higher customer lifetime values.

In the following years, Cadillac’s growth eroded while BMW market share grew. By the 1980s BMW overtook Cadillac.

Cadillac has now changed its tune, promoting itself as “The New Standard of the World” and focusing on its “power, performance, and design” to grow its customer base.

What’s the lesson in all this?

As marketers, we need to care about customer lifetime value and customer equity as much as we care about current sales and market share.
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Our brands depend on it.