From anywhere to anyone

Customer Value Management November, 2002

Introduction to customer value management

What is Customer Value ?
DEFINITION Customer Value Management is a process designed to develop and execute valuebased strategies which impact marketing, strategic planning, competitive positioning, branding, pricing, and selling.

VALUE

Quality

Price

Customer Value Defined

Overall Value Satisfaction

Overall Quality

Relative Price Competitiveness

Product Quality

Customer Service

Marketing Sales

Order Fulfillment

Sub-attributes

Sub-attributes

Fundamentals of customer Value

Value is the assessment of all that you get in return for all that you give in an exchange. Seven Fundamentals on customer value: Value is customer defined Value is Opaque Value is contextual Value is multidimensional Value is a trade-off Value is Relative Value is a mindset

Contrasting the product mindset with the customer value mindset

Dimension Strategic Focus Growth Driver Offerings Product Mindset Product leadership-wining by launching innovative products and adding features to products Primary Demand-sell broadly to new customers Horizontal products with limited customization. Delegate solutions design and delivery to partners. Perpetual license pricing to maximize revenue from transactions Customer value mindset Customer Value-winning by creating and delivering superior value to customers Selective Demand-sell deeply to existing customers Customized vertical solutions. Collaborate with partners to design and deliver solutions. Value-based pricing to align value creation for customers with value capture for the firm through subscription pricing and gain-sharing arrangements Customer-centric organization organized around key customers segments or customer accounts, with a single face to a customer. Emphasis on ongoing customer engagement and customer value assessment/tracking Customer satisfaction, profitability and growth. Declare success when customers experience success Ongoing tracking and continuous improvement of the total customer experience

Pricing Strategy

Sales Organization Marketing Operations Success Metrics Monitoring & Tracking

Product-centric organization with multiple faces to a customer. Emphasis on product launches and breath campaigns to increase reach and influence customer perceptions Product revenues and product profitability. Declare success at product sale Periodic surveys of customer satisfaction with products.

4 Stages in CVM
Stage One
Minimum Requirements

Stage Two
Customer Focus

Stage Three
Customer Attitudes

Competitive Focus on Targeted Markets Customer Value

Stage Four

Conformance Quality Delivering what we promise Meeting standards

Customer Satisfaction Providing what customers want Responding to customer complaints

Customer Loyalty Retaining our customers Getting them to recommend us

Meeting critical needs of targeted customers Outperforming competitors Creating new, unique benefits

21st Century Growth Company

 Satisfaction in itself does not lead to customer loyaltyget no (customer) satisfaction I cant Positive empirical relationship between value focus and link to market share

Satisfaction = Satisfy Existing Customers Better

Value = Improve Your Competitive Position Attract and Retain Targeted Customers

Satisfaction
Current Service

Value
The Entire Customer Relationship Lead Indicator Company Vs. Competition
Proven Relationship to Business Performance

Lag Indicator

Company Performance Tenuous Link to Business Performance

Customer Value Management

1. Assess Market Opportunity 2. Conduct Analysis

Customer Value Management

4. Measure and Reward Performance 3. Commit to a Value Proposition

 Strengthen value propositions value is the The Value of decisions Customer Value basis for customer Identify responses with the greatest impact on customers future purchase behavior. Discipline and focusacross all functions

The key to attracting, satisfying, and retaining customers.