Sustainable Business Growth and Profitability with Customer Value Management
Sustainable Business Growth and Profitability with Customer Value Management
Industry must treat its Customers Better
A key finding was that focus in industry is on shareholder value rather than customer value. Even though 65% of the companies surveyed CLAIMED to be customer focused, the MarketAbility study concluded that only 10% of them really practice the customer focus they claim. MarketAbility identified four levels of company performance on Customer Value Management:-
ľ Non-Starters - 20%
ľ Laggards - 40%
ľ Followers - 30%
ľ Leaders - 10%
The GOOD NEWS: there is some very good and advanced CVM practice to be found¡K.
The BAD NEWS: in many companies customer focus is fragmented and inconsistent.
The WORSE NEWS: in some companies it is non-existent.
There is also a misguided perception that customer relationship management is inextricably linked to information technology and computer systems. Hence our coining of the term Customer Value Management (CVM), which will feature in this article from now on (rather than customer relationship management).
CVM Defined
Customer Value Management defined¡K¡K
CVM is the marketing process whereby supplier and customer create value through a planned and systematic exploitation of mutually beneficial sustainable and profitable market opportunities.
Industrial Companies: CVM Behaviours
Our research enabled us to identify the key behaviours that distinguish the four categories of performer we have identified, which are summarized below
Non-Starters have an asset-driven Business Strategy, poor market understanding with no customer research and no customer segmentation; basic competitor understanding. Their offerings are poorly defined and not communicated internally, resulting in confused offerings poorly communicated to customers. They exhibit no clearly defined measures of success, poor to non-existent customer service, non-existent value chain management, no account management, limited customer interfaces and no regular attempt to obtain customer feedback.
Laggards have a product-driven business strategy, basic market understanding with ad hoc customer
research and limited customer segmentation, typically by product/geography; good competitor
understanding. Their basic offerings show no clear differentiation and are understood mainly by
customer-facing groups, but offerings are poorly communicated to customers. They exhibit basic
financial measures, poor to non-existent customer service, non-existent value chain management, no
account management, basic sales contacts to customer and ad hoc customer research.
Followers have a product-driven business strategy, good market understanding with periodic customer satisfaction research and well-defined customer segments; advanced competitor understanding. Their basic value propositions for different segments are understood company-wide but with limited customer communications. They exhibit advanced financial and some non-financial measures of success, reactive customer service, supply chain management, basic account management with customer contacts mainly through sales department and periodic customer satisfaction survey
Leaders have a customer-focused business strategy based on advanced market understanding with regular interactive customer needs fulfilment dialogue, clearly defined needs-based customer segments and strategic competitor understanding. Their differentiated offerings for each segment enjoy advanced understanding company-wide with proactive customer communications. They exhibit well-defined and advanced measures of success using internal and customer metrics, proactive customer service, advanced value chain management, advanced and comprehensive account management with multi-functional, multi-level account contacts, a regular customer dialogue and independent customer research.
A New CVM Model to Deliver Sustainable Growth and Profitability
MarketAbility has derived a 5-step best practice model to help industrial companies to improve their CVM performance and practice, using the key drivers identified in our study:-
1. Understand our Customers
Understanding our customers MEANS looking at the world through the customer¡¦s eyes and seeing what they see and how they see it.
2. Commit to the Customer
Committing to the customer means creating a compelling offering (value proposition) to the customer that delivers value to them and fulfils their needs.
3. Create Customer Value
Creating customer value means implementing that value proposition consistently and effectively.
4. Obtain Customer Feedback
A vital and too often overlooked aspect customer value management is getting feedback from the customer, ideally using internal contacts and external independent third parties.
5. Measure and Improve
We should also remember the critical importance of continuous improvement in our offering to the customer.
These five steps are examined now in more detail.
Understand our Customers: Discover
Understanding the customer is the first step in achieving sustainable growth and profit by applying customer value management. Discover what your customers¡¦ needs and value expectations are. Discover what the business relationship looks like through their eyes. Discover who the players are in the value chain, from the end user of your value commitment to all channel members. Discover and quantify the value that flows between the value chain members. Discover which customer value segments exist, based on their value needs, expectations and choices.
This activity of discovery demands a much greater proactive commitment than merely surveying customers or listening to them. It requires attentiveness, creativity, imagination and even speculation. You must constantly be alert to new discoveries which may challenge or change your
original ideas, listening for signals like, ¡§¡Kif only¡K¡K,¡¨ ¡§¡Kbut what I really need¡K..,¡¨ or ¡§¡K..it would be worth ¡K.. to me¡¨.
You only have to look around at some of the really successful offerings in the marketplace to realize that this is true. If Michael Dell had listened to the traditional channel partners in the pc industry, he wouldn¡¦t have invented his highly successful direct offering. People and companies who anticipate market needs and exceed the customers¡¦ value expectations are the rule makers.
Discover (understand our customer) has five major actions:-
1. Define and map the market.
Describe the entire supply and buy process from raw materials to end-user. The customer¡¦s buying process examines the key value drivers that drive the buyer¡¦s decision-making and links the drivers to the evolution of customer value (Customer Value Cycle). Look at your market and the offerings in the market through the eyes of the customer.
2. Understand Customer Needs and Value Expectations.
Understand customer choices and the reasons for those choices. Identify benefits sought by the customer and quantify the value to the customer of that benefit. Understand the buyers¡¦ willingness to give up certain things in order to get what is most important to them.
3. Discover customer value segments.
Discover segments built around similar customer values. Value-based segmentation identifies groups of customers with the same or similar value ratios. Always look for unmet needs as a basis for segments.
4. Assess your competitive position.
Know how customers in a customer value segment perceive and value your offering versus that of your competition. Assessment of your competitive position evaluates the customer¡¦s judgment of your customer value commitment in comparison with those of your competitors.
5. Select target customer value segments.
This is based on the attractiveness of the segment and your ability to compete effectively in that segment by delivering superior customer value. Target only those customer value segments that are attractive and where you have or can build a competitive advantage that the customer recognizes and values. Selecting target customer value segments leads to a value-based strategy where you as a supplier make a conscious choice about which customer value segments you choose to serve. Only serve customers whose Customer Lifetime Value (CLV) is positive and high.
We would always recommend that you conduct thorough research into your customers¡¦ needs as a basis for segmentation. But recognizing that time doesn¡¦t always permit that step, we have developed a MarketAbility model for a basic, ¡§generic¡¨ customer value segmentation to help people get started:
Innovators, Growers, Optimizers, Economizers.
Each customer value segment buys according to a value commitment and the use of the value ratio to make a purchasing decision.
For the Innovator customer value segment, the primary value-driver is the need to maintain a leading-edge competitive advantage in its market and to be perceived as an innovator in its industry by leading innovation and creating value leading edge products, technology, markets, processes. A highly knowledgeable risk-taker, the Innovator is open to new ideas and products and offsets the relative cost with a higher priced offering, which means an Innovator tends not to be price sensitive.
The Grower customer value segment is a close second to the innovator, but its most important value driver is the need to reach full market potential by being able to fulfil demand and avoid the loss of opportunity. Less of a risk-taker, the Grower customer value segment focuses more on the optimisation of tried and tested solutions.
The need to optimize profits is the main value driver for the Optimizer customer value segment. These customers seek to optimize total cost of acquisition and use. This value customer value segment expects relative costs to be satisfied by achieving operational efficiency and is willing to pay for help in this from the knowledgeable supplier.
The fourth generic MarketAbility customer value segment is the Economizers: The essential value driver for this group is the need to buy a low cost offering. Purchase decisions are made often on the basis of price alone, when no further cost advantages are perceived overall.
The adoption of a more enlightened and meaningful customer value segmentation is a critical first step to better Customer Value Management, leading to sustainable business growth and profit.
Commit to the Customer: Commit
Just developing an offering doesn¡¦t necessarily offer value to the customer. Once you¡¦ve understood the customers¡¦ needs and value expectations, you have to make a serious commitment to the customer to meet or exceed those expectations.
Customer value segments at different levels in your value chain impact the demand for your products and services to a greater or lesser extent. The key is to deploy the right customer value commitment for each customer value segment, so that you¡¦re not deploying resources unnecessarily and so that customers can appreciate the value they¡¦re receiving from you and appreciate the real value of your customer value commitment. If you are to capture the true value for your offering, you must commit to the customers¡¦ value needs and expectations.
Commit has five major actions:
1. Define the customer value segment strategy.
This must be based on choosing the value disciplines on which you¡¦re going to compete in your target customer value segment.
2. Develop a differentiated offering.
Your customer value commitments have to embody the differentiated customer value commitment for the respective customer value segment and link the customer value commitment to the brand.
3. Fill the capability gaps to be able to deliver the value.
This requires assessment of your current capabilities against the capabilities needed to deliver the customer value commitment competitively and effectively to the target customer value segment, and a plan to fill the gaps.
4. Communicate internally and externally.
The customer value commitment must be communicated to the customer value segments and within your own organization. This means managing both the sales and the marketing communications processes to provide a clear, consistent message.
5. Define Key Performance Indicators (KPIs).
Include the key measures and benchmarks customers use to track your value performance.
The value customers receive from your customer value commitments should have a positive meaningful impact on your relationship with them. Once customers¡¦ value drivers are known, your customer value segment strategy is set and you¡¦ve closed the gaps, the next step is to determine how these values can become the driving influence of your value proposition.
At MarketAbility in CVM we go beyond value propositions and make customer value commitments.
Your customer value commitment must provide a compelling reason for customers to buy from you. Your commitment is that, if the customer buys from you, this is the value it will derive ¡V the Desired Benefits over the Relative Cost. And that your customer value commitment is superior to what the competition can offer. A successful customer value commitment leads to a long-term relationship which provides value to your customer and value to your company, defined as Supplier Value (VS) is equal to CLV over the sum of your Acquisition, Maintenance and Retention costs¡XVS = CLV / £U (Acquisition + Maintenance + Retention).
Consistently successful companies are ones that have developed and implemented customer value commitments based on customer value expectations.
In Customer Value Management, a customer value commitment is targeted at a customer value segment and it is distinctive and differentiated from and superior to competitors¡¦ value propositions and profitable for the supplier. ¡§Distinctive¡¨ means it grabs the customer¡¦s attention. ¡§Differentiated¡¨ means a unique commitment that is a combination of a different mix of Desired Benefits and Relative Costs for each customer value segment. A customer value commitment is value-segment specific; there isn¡¦t a ¡§one size fits all.¡¨ ¡§Targeted¡¨ means that customer value segments have been identified and selected as viable, i.e., in which you can create customer value while making a profit. ¡§Superior¡¨ means delivering more value than competitor offerings. The customer value commitment must be economically profitable because you¡¦re in business to make a profit.
Crafting customer value commitments defines what business resources are critical and which aren¡¦t to winning business in the targeted customer value segments. This enables you to focus on specific value creating factors, resource accordingly and achieve the superior value position with customers.
Creating value for customers has a cost associated with it. Value-driven companies earn a profit by building their value upon the most important customer benefits and discipline themselves to NOT provide items of little or no value to the customer. If you offer all features and all services to all customers or if your customer value commitments to different customer value segments are not clearly different, you haven¡¦t gained enough insight about the customers¡¦ value expectations and your profit drivers.
It¡¦s important to reinforce the fact that one customer value commitment isn¡¦t enough even for a company with a single product. The CVM view of the customer is ¡§any member of the value chain who directly or indirectly purchases or influences the purchase of our offering¡¨. In many instances you may be confronted with a complex value chain in which you must address several value chain members, each with their own unique value set, demanding you to address that value set with a unique customer value commitment.
Create Customer Value: Create
Any business big or small succeeds initially because it brings a product or service to the market for which a number of people in the market are willing to pay. Either by instinct or deliberate planning or chance or a combination of all three, the business offering has value for a group of customers interested in what was being offered.
After the initial introduction, when the newness of the product or service has worn off and the innovator buyers have gone away, the real work of differentiation begins. Offerings now have to have value for customers, value which is superior to the customer value commitment offered by competitors. And you must continually create, deliver and improve the value promised. This is the basis for sustainable growth and profit, which we call Customer Value Management.
Create has five major actions:
1. Develop a customer value commitment culture.
The customer value commitment has to be more than a slogan; it has to be expected, normative behaviour throughout the organization, a commitment that the workforce is empowered to implement. Every customer touch point is an opportunity to create or destroy value.
2. Define the customer value processes.
Identify what is needed to deliver the customer value commitment and define all the processes, sub-processes and individual activities that must be in place to deliver customer value from understanding the customer, to creating customer commitment to converting that customer commitment into an implemented customer value to assessing the customers¡¦ levels of satisfaction with your customer commitment to continuously improving your commitment in line with changing customer values and to stay ahead of competition in delivering the desired value to the customer.
3. Populate the customer value processes.
The people skills and competencies necessary for a customer value culture have to be defined and acquired. Your people have to be deployed, trained and developed in the customer value culture and should be empowered and rewarded accordingly.
4. Invest in appropriate infrastructure.
To deliver customer value you have invest in the infrastructure, this may be infrastructure to create and support the physical, service and intangible elements of your customer value commitment, it may be to select and manage appropriate value channels which deliver the value to the customer and it may include knowledge management systems to support your customer value creation.
5. Implement customer value cost-effectively and efficiently.
Having understood, designed and created your customer value commitment, you have achieved nothing until it is implemented effectively. Implementation actions should be linked directly to the key elements of the customer value commitment and have to be clearly defined, planned, prioritized, communicated and agreed to.
An odd thing happens to most businesses as they grow and evolve--management tends to become less concerned about value being delivered to customers and more concerned with maximizing business operations. Business becomes more competitive, customers seem more recalcitrant, margins are squeezed and re-organization becomes the rule rather than the exception. Every customer value segment has specific elements of its value set that ¡V if fulfilled ¡V will attract a non-price sensitive response. The key is to identify these elements.
Once the value expectations of customers are understood, the company must create internal alignment to deliver the expected value. This means that all parts of the organization must understand its contribution to customer value. The workforce must be empowered to create and deliver customer value, to which everyone's compensation must be linked. Skills and competencies must be in place to create and deliver customer value, and customer feedback and KPIs (Key Performance Indicators) must be communicated to all parts of the organization regularly. But first and foremost the customer culture MUST be led from the top.
Obtain Customer Feedback: Assess
It¡¦s been calculated that the cost of winning a new customer is somewhere between five and 20 TIMES greater than retaining an existing customer, depending upon the nature of your business. But most companies don¡¦t know exactly why business was won or lost; overlooked is a detailed and rigorous examination of won-lost business. The more undifferentiated or ¡§commoditized¡¨ a business is or the more a business is being driven toward competitive tendering, the more critical it is to track and monitor the reasons for business success and/or failure.
A number of our clients can¡¦t answer the question, ¡§How did you get the business?¡¨ or ¡§Why did you lose the business?¡¨ They¡¦re so focused on the next sale, the next transaction that the reason business was won or lost is moot. It just ¡§is.¡¨
Assess has five major actions:
1. Track won and lost business.
The reasons for won and lost business must be examined rigorously, systematically and regularly, preferably by an objective won-and-lost business manager.
2. Proactively seek customer feedback.
All customer interfaces should be identified and integrated into appropriate feedback systems which track meaningful measures.
3. Manage and resolve customer queries and complaints.
Analysis isn¡¦t beneficial without implementing corrective actions.
4. Regularly and independently assess your performance against customer expectations.
In addition to regular direct contact with customers, we also recommend obtaining feedback via independent third parties. A key is to communicate the results internally and to your customers so that the value commitment is understood.
5. Combine and integrate to for improve your customer value commitment.
Regular analysis helps identify what you are doing well that you can reinforce and repeat and identify the gaps in your value performance against customer expectations and permits the implementation of appropriate corrective actions.
The fourth step in Customer Value Management is essential to make sure that Steps 1, 2 and 3 have value for the customer and are profitable for you. Step 4 is all about assessment, obtaining customer feedback in several forms and from several sources. This enables you to validate that (1) the value being delivered to the customers in a customer value segment at least is in line with and, preferably, is exceeding their expectations and (2) you are proactively identifying the shifts, changes and evolution of your customers¡¦ value expectations.
Tracking won and lost business is a proactive process that requires a culture that seeks out and acquires answers to the questions of why business was won and lost. And it calls for a dynamic planning process that is responsive rather than inert.
Step 4 has to be integrated with the other four steps ¡V each is important to sustaining growth and profit as part of Customer Value Management.
Step 4 is a formal step to catch something that has been done very well or something that has been missed.
Whether through experience or intuition we all know that only one of 26 customers with a problem tells you about it; this is an ¡§activist,¡¨ a customer who brings a problem to your attention with the expectation that you¡¦ll correct it. The other 25 are ¡§terrorists,¡¨ telling stories about the value that wasn¡¦t delivered without giving you an opportunity to correct the situation. A satisfied customer tells five others about the value it received. Of your unhappy customers, 91% will never purchase from you again, and they will tell everyone else why except you.
The key is to ensure that someone in your organization feels responsible for that customer and feels empowered to represent the customer within your organization. The more important the customer, the more senior the account manager should be. In some companies, there may be a case for a cadre of senior corporate account managers, handling very large accounts with multiple business unit and functional interfaces.
The customer account managers should be responsible for providing feedback for each stage of Customer Value Management. No customer is so unimportant as to not warrant an account manager. That means every customer is important enough to warrant an account manager.
Measure and Improve Value: Improve
Customer Value Management is dynamic and continuous, driven by the fact that customers¡¦ needs and value expectations are dynamic, not static. The value ratio changes with time, as Desired Benefits and Relative Costs are satisfied, new value expectations appear. Planning to provide the same value for your customer value segments next year that you did this year by definition reduces the value you provide and they will derive. You were originally selected as a supplier because you provided superior value. But your customers¡¦ needs have moved on and your competitors¡¦ offerings have improved. Next year they need something new and better from you.
Improve has five major actions:
1. Spot the gaps and the ¡§quick-hits¡¨.
These are items arising from an analysis of the regular and systematic measures, which need to be in place to track results and performance on customer value.
2. Challenge customer understanding.
Customer value needs and expectations are dynamic, not static.
3. Re-define your customer value commitment.
Changes in customer value expectations demand a re-definition of your customer value commitment.
4. Improve your customer value.
As value needs are fulfilled, the value ratio changes.
5. Anticipate change.
Your customer value commitment results in a better understanding of future customer value needs and expectations. Your ability to anticipate these changes enhances the value of your customer commitment.
In Customer Value Management for sustainable growth and profit Step 5 is about questions that need to be asked and answered to enable you to enhance your customer value commitments by formally updating your understanding of your customers¡¦ needs and expectations, by choosing to make the needed improvements where there are gaps. The feedback obtained in Step 4 may require you to go back to Step 1 and ask, ¡§What don¡¦t I understand about the customer?¡¨ It may require a recommitment to value or improvement in the way you create value. It may require you to change the feedback mechanisms in Step 4. You may have to say, ¡§We¡¦re not understanding the unmet needs of the customer. We¡¦re not asking the right questions.¡¨
Measure and Improve means auditing and evaluating customer value segments for their marketing impact and their ability to provide profitability. It means anticipating customers¡¦ changing needs and expectations by identifying future trends, which is also required to maintain a position as a value leader.
Businesses often measures the wrong things about customers because the business has created the wrong perspective on its customer, such as believing a better product is better for customers, when in some cases a better price with the existing product is what the customer really will value.
This is the time to be brutally honest and ask, ¡§If I was in the position of my customer, how would I do what they are trying to do?¡¨ Forget about having best most wonderful product. What is the customer trying to do, why are they doing it and how could it be done better needs to be the focus.
One of our chemical company clients had conducted a comprehensive study of their end-user customers and had identified four need- and behaviour-based customer value segments:
Committed Switchers Strugglers Complacent
For each customer value segment the company had developed a clear customer value commitment and were implementing a well-defined strategy in each customer value segment, described in the figure below
The new strategies were working well, and the business was being transformed to be much more focused and more profitable. But after two to three years, it became apparent that the least successful part of the client¡¦s customer value commitment strategy was ¡§STOP the switchers¡¨.
This discovery caused the company to re-assess its segmentation and identify a new customer value segment that needed to be addressed, the Goners. These were former Switcher customers the client had failed to stop from switching. Based on this insight, a new customer value commitment was created called ¡§WIN BACK the goners,¡¨.
Today¡¦s Customer Value Managers operate in a world of constant and often rapid change. The dynamics of societies, economies, markets, companies, customers, potential customers and competitors impact the success or otherwise of the Customer Value Manager¡¦s strategies, commitments and plans. The effective Customer Value Manager needs to have highly efficient change radar in place to be able to anticipate and respond to these changes.
This means having regular interactive dialogs with customers and asking pertinent questions about their future. This means conducting regular economic and market research to anticipate changes in the macro picture. This means monitoring competitor activities closely and regularly reviewing and assessing competitor strategies. All of these activities should be an integral part of your Customer Value Management model.
We¡¦ve all seen planning processes and systems fail because they become a ¡§fill-in-the blanks¡¨ exercise. Planning is a serious process, demanding a high level of analysis and dynamic creativity in the interpretation of data and the development of scenarios, not forgetting the development of your own strategies in the light of the scenarios.
The key to anticipating how value expectations and your value commitment will change in the future is to measure the impact your customer value commitment is having on your customer value segments and their businesses. This is the most critical leading indicator of performance and yet often the least measured item. Measuring the impact of your current customer value commitments provides insight into your customers¡¦ current decisions, and future intent and value needs.
Customer Value Management demands discipline:
„H A discipline to understand the customer and the value set of the customer that drives their needs, their buying decisions and buying behaviour.
„H A discipline to build a commitment to the customer in direct response to that value set that drives their buying decisions and behaviour.
„H A discipline to design and develop your organization, your people resources and other infrastructure based on your customer value commitment to ensure the relevance of these elements to the creation of customer value.
„H A discipline to regularly and rigorously obtain feedback from your customers about your customer value commitment and customer value creation.
„H A discipline to measure your performance using the customer¡¦s scorecard rather than your own.
„H A discipline to never rest on your laurels, to always be looking for way to improve your understanding of the customer value segments¡¦ needs and expectations and your customer value commitment.
„H A discipline to plan rigorously around the changing needs and values of customers and to manage and transform your business, business model and your organization based on the changing needs and values of your chosen target customers
In addition, Customer Value Management demands a mind-set focused on the understanding of customers and the creative application to developing differentiated customer value commitments to create value for chosen customers.
Checklist: CVM Step 1: Discover - Understand the Customer
1. Have you defined and mapped the market? Look at your market and the value offerings in the market through the eyes of the customer. Understand customer choices and the reasons for those choices.
2. Have you developed a clear understanding of your customers' value needs and expectations? Identify the value sought by the customer value segment and quantify the value to the customer of that value.
3. Have you discovered customer value segments built around similar values? Seek unmet needs relentlessly and segment according to customer needs.
4. Do you know how customers in a customer value segment perceive and value your customer value commitment versus that of your competition? Base your assessment of your relative competitive advantage on the customers¡¦ perception and judgment of your customer value commitment and competing offerings.
5. How have you targeted customer value segments? Target only those customer value segments where you have or can build a competitive advantage that the customer recognizes and values. Only serve customer value segments whose lifetime value is positive and high.
Checklist: CVM Step 2: Commit - Commit to the Customer
For each target segment
1. Have you defined and quantified your segment strategy based on selecting the value disciplines on which you¡¦ve chosen to compete?
2. Have you developed differentiated customer value commitments for the targeted value segments?
3. Are you able to fill the capability gaps in your customer value commitments?
4. Have you enabled the clear commitment to fulfil customer value needs and expectations by creating standards of service, business rules and exceptions and communicated these to the value segments and internally within your own company?
5. Have you defined the relevant Key Performance Indicators (KPIs) to track and the appropriate performance measures, benchmarks?
Checklist: CVM Step 3 Create - Create Customer Value
1. Have you developed a customer culture throughout the organization and empowered the workforce to implement it?
2. Have you defined the key customer value processes?
3. Have you populated your customer value processes by defining the requisite people skills and competencies, deploying people resources, training and developing the staff and measuring and compensating for value performance?
4. Have you invested in an infrastructure to deliver customer value by building knowledge management systems, defining a channel strategy and selecting channel partners and using e-Commerce where appropriate?
5. Have you implemented a customer value orientation by empowering your people, planning and prioritizing your actions, defining and implementing organizational structure to support customer value and deploying it?
Checklist: CVM Step 4: Assess - Obtain Customer Feedback
1. Are you tracking and analyzing won and lost business?
2. Are you seeking proactively customer feedback by identifying all customer interfaces and developing appropriate feedback systems, tracking measures?
3. Are you organised to manage and resolve efficiently customer queries and complaints and implement corrective actions?
4. Are you regularly assessing customer satisfaction through external research and communicating the results internally and to your customers?
5. Are you analyzing all customer feedback, identifying the gaps in performance against customer expectations and implementing appropriate corrective actions?
Checklist: CVM Step 5: Improve - Measure and Improve Value
1. Are you measuring and reporting the KPIs, identifying the performance gaps and defining the necessary improvements?
2. Are you challenging your understanding of the customer by improved customer research that improves your customer knowledge, sharing customer data and critically reviewing your market segmentation?
3. Do you regularly re-define your commitment to customers by updating, enriching your customer value commitments, service standards and KPIs?
4. Are you consistently working to improve your customer-focused culture by refining your customer value processes, the population of them and the infrastructure to support them?
5. Do you anticipate change by working to identify future trends and changes, creating and analyzing business scenarios, developing contingency plans and managing change effectively?
Watch this space to learn more about creating sustainable business profitability through better Customer Value Management.
Sustainable Business Growth and Profitability with Customer Value Management - To learn more about this author, visit Phil Allen's Website.
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Analysts constantly criticize corporations for destroying shareholder value. We can reveal one of the reasons why! Accenture reported recently that the chemicals and plastics industry gives away hundreds of millions of margin dollars every year by under-performing in the market place. A new MarketAbility study of customer relationship management practice in industry serves only to confirm and partially explain this sad picture at a broader industry level. The survey examined 150 leading industrial companies and also surveyed customer satisfaction.
Industry must treat its Customers Better
A key finding was that focus in industry is on shareholder value rather than customer value. Even though 65% of the companies surveyed CLAIMED to be customer focused, the MarketAbility study concluded that only 10% of them really practice the customer focus they claim. MarketAbility identified four levels of company performance on Customer Value Management:-
ľ Non-Starters - 20%
ľ Laggards - 40%
ľ Followers - 30%
ľ Leaders - 10%
The GOOD NEWS: there is some very good and advanced CVM practice to be found¡K.
The BAD NEWS: in many companies customer focus is fragmented and inconsistent.
The WORSE NEWS: in some companies it is non-existent.
There is also a misguided perception that customer relationship management is inextricably linked to information technology and computer systems. Hence our coining of the term Customer Value Management (CVM), which will feature in this article from now on (rather than customer relationship management).
CVM Defined
Customer Value Management defined¡K¡K
CVM is the marketing process whereby supplier and customer create value through a planned and systematic exploitation of mutually beneficial sustainable and profitable market opportunities.
Industrial Companies: CVM Behaviours
Our research enabled us to identify the key behaviours that distinguish the four categories of performer we have identified, which are summarized below
Non-Starters have an asset-driven Business Strategy, poor market understanding with no customer research and no customer segmentation; basic competitor understanding. Their offerings are poorly defined and not communicated internally, resulting in confused offerings poorly communicated to customers. They exhibit no clearly defined measures of success, poor to non-existent customer service, non-existent value chain management, no account management, limited customer interfaces and no regular attempt to obtain customer feedback.
Laggards have a product-driven business strategy, basic market understanding with ad hoc customer
research and limited customer segmentation, typically by product/geography; good competitor
understanding. Their basic offerings show no clear differentiation and are understood mainly by
customer-facing groups, but offerings are poorly communicated to customers. They exhibit basic
financial measures, poor to non-existent customer service, non-existent value chain management, no
account management, basic sales contacts to customer and ad hoc customer research.
Followers have a product-driven business strategy, good market understanding with periodic customer satisfaction research and well-defined customer segments; advanced competitor understanding. Their basic value propositions for different segments are understood company-wide but with limited customer communications. They exhibit advanced financial and some non-financial measures of success, reactive customer service, supply chain management, basic account management with customer contacts mainly through sales department and periodic customer satisfaction survey
Leaders have a customer-focused business strategy based on advanced market understanding with regular interactive customer needs fulfilment dialogue, clearly defined needs-based customer segments and strategic competitor understanding. Their differentiated offerings for each segment enjoy advanced understanding company-wide with proactive customer communications. They exhibit well-defined and advanced measures of success using internal and customer metrics, proactive customer service, advanced value chain management, advanced and comprehensive account management with multi-functional, multi-level account contacts, a regular customer dialogue and independent customer research.
A New CVM Model to Deliver Sustainable Growth and Profitability
MarketAbility has derived a 5-step best practice model to help industrial companies to improve their CVM performance and practice, using the key drivers identified in our study:-
1. Understand our Customers
Understanding our customers MEANS looking at the world through the customer¡¦s eyes and seeing what they see and how they see it.
2. Commit to the Customer
Committing to the customer means creating a compelling offering (value proposition) to the customer that delivers value to them and fulfils their needs.
3. Create Customer Value
Creating customer value means implementing that value proposition consistently and effectively.
4. Obtain Customer Feedback
A vital and too often overlooked aspect customer value management is getting feedback from the customer, ideally using internal contacts and external independent third parties.
5. Measure and Improve
We should also remember the critical importance of continuous improvement in our offering to the customer.
These five steps are examined now in more detail.
Understand our Customers: Discover
Understanding the customer is the first step in achieving sustainable growth and profit by applying customer value management. Discover what your customers¡¦ needs and value expectations are. Discover what the business relationship looks like through their eyes. Discover who the players are in the value chain, from the end user of your value commitment to all channel members. Discover and quantify the value that flows between the value chain members. Discover which customer value segments exist, based on their value needs, expectations and choices.
This activity of discovery demands a much greater proactive commitment than merely surveying customers or listening to them. It requires attentiveness, creativity, imagination and even speculation. You must constantly be alert to new discoveries which may challenge or change your
original ideas, listening for signals like, ¡§¡Kif only¡K¡K,¡¨ ¡§¡Kbut what I really need¡K..,¡¨ or ¡§¡K..it would be worth ¡K.. to me¡¨.
You only have to look around at some of the really successful offerings in the marketplace to realize that this is true. If Michael Dell had listened to the traditional channel partners in the pc industry, he wouldn¡¦t have invented his highly successful direct offering. People and companies who anticipate market needs and exceed the customers¡¦ value expectations are the rule makers.
Discover (understand our customer) has five major actions:-
1. Define and map the market.
Describe the entire supply and buy process from raw materials to end-user. The customer¡¦s buying process examines the key value drivers that drive the buyer¡¦s decision-making and links the drivers to the evolution of customer value (Customer Value Cycle). Look at your market and the offerings in the market through the eyes of the customer.
2. Understand Customer Needs and Value Expectations.
Understand customer choices and the reasons for those choices. Identify benefits sought by the customer and quantify the value to the customer of that benefit. Understand the buyers¡¦ willingness to give up certain things in order to get what is most important to them.
3. Discover customer value segments.
Discover segments built around similar customer values. Value-based segmentation identifies groups of customers with the same or similar value ratios. Always look for unmet needs as a basis for segments.
4. Assess your competitive position.
Know how customers in a customer value segment perceive and value your offering versus that of your competition. Assessment of your competitive position evaluates the customer¡¦s judgment of your customer value commitment in comparison with those of your competitors.
5. Select target customer value segments.
This is based on the attractiveness of the segment and your ability to compete effectively in that segment by delivering superior customer value. Target only those customer value segments that are attractive and where you have or can build a competitive advantage that the customer recognizes and values. Selecting target customer value segments leads to a value-based strategy where you as a supplier make a conscious choice about which customer value segments you choose to serve. Only serve customers whose Customer Lifetime Value (CLV) is positive and high.
We would always recommend that you conduct thorough research into your customers¡¦ needs as a basis for segmentation. But recognizing that time doesn¡¦t always permit that step, we have developed a MarketAbility model for a basic, ¡§generic¡¨ customer value segmentation to help people get started:
Innovators, Growers, Optimizers, Economizers.
Each customer value segment buys according to a value commitment and the use of the value ratio to make a purchasing decision.
For the Innovator customer value segment, the primary value-driver is the need to maintain a leading-edge competitive advantage in its market and to be perceived as an innovator in its industry by leading innovation and creating value leading edge products, technology, markets, processes. A highly knowledgeable risk-taker, the Innovator is open to new ideas and products and offsets the relative cost with a higher priced offering, which means an Innovator tends not to be price sensitive.
The Grower customer value segment is a close second to the innovator, but its most important value driver is the need to reach full market potential by being able to fulfil demand and avoid the loss of opportunity. Less of a risk-taker, the Grower customer value segment focuses more on the optimisation of tried and tested solutions.
The need to optimize profits is the main value driver for the Optimizer customer value segment. These customers seek to optimize total cost of acquisition and use. This value customer value segment expects relative costs to be satisfied by achieving operational efficiency and is willing to pay for help in this from the knowledgeable supplier.
The fourth generic MarketAbility customer value segment is the Economizers: The essential value driver for this group is the need to buy a low cost offering. Purchase decisions are made often on the basis of price alone, when no further cost advantages are perceived overall.
The adoption of a more enlightened and meaningful customer value segmentation is a critical first step to better Customer Value Management, leading to sustainable business growth and profit.
Commit to the Customer: Commit
Just developing an offering doesn¡¦t necessarily offer value to the customer. Once you¡¦ve understood the customers¡¦ needs and value expectations, you have to make a serious commitment to the customer to meet or exceed those expectations.
Customer value segments at different levels in your value chain impact the demand for your products and services to a greater or lesser extent. The key is to deploy the right customer value commitment for each customer value segment, so that you¡¦re not deploying resources unnecessarily and so that customers can appreciate the value they¡¦re receiving from you and appreciate the real value of your customer value commitment. If you are to capture the true value for your offering, you must commit to the customers¡¦ value needs and expectations.
Commit has five major actions:
1. Define the customer value segment strategy.
This must be based on choosing the value disciplines on which you¡¦re going to compete in your target customer value segment.
2. Develop a differentiated offering.
Your customer value commitments have to embody the differentiated customer value commitment for the respective customer value segment and link the customer value commitment to the brand.
3. Fill the capability gaps to be able to deliver the value.
This requires assessment of your current capabilities against the capabilities needed to deliver the customer value commitment competitively and effectively to the target customer value segment, and a plan to fill the gaps.
4. Communicate internally and externally.
The customer value commitment must be communicated to the customer value segments and within your own organization. This means managing both the sales and the marketing communications processes to provide a clear, consistent message.
5. Define Key Performance Indicators (KPIs).
Include the key measures and benchmarks customers use to track your value performance.
The value customers receive from your customer value commitments should have a positive meaningful impact on your relationship with them. Once customers¡¦ value drivers are known, your customer value segment strategy is set and you¡¦ve closed the gaps, the next step is to determine how these values can become the driving influence of your value proposition.
At MarketAbility in CVM we go beyond value propositions and make customer value commitments.
Your customer value commitment must provide a compelling reason for customers to buy from you. Your commitment is that, if the customer buys from you, this is the value it will derive ¡V the Desired Benefits over the Relative Cost. And that your customer value commitment is superior to what the competition can offer. A successful customer value commitment leads to a long-term relationship which provides value to your customer and value to your company, defined as Supplier Value (VS) is equal to CLV over the sum of your Acquisition, Maintenance and Retention costs¡XVS = CLV / £U (Acquisition + Maintenance + Retention).
Consistently successful companies are ones that have developed and implemented customer value commitments based on customer value expectations.
In Customer Value Management, a customer value commitment is targeted at a customer value segment and it is distinctive and differentiated from and superior to competitors¡¦ value propositions and profitable for the supplier. ¡§Distinctive¡¨ means it grabs the customer¡¦s attention. ¡§Differentiated¡¨ means a unique commitment that is a combination of a different mix of Desired Benefits and Relative Costs for each customer value segment. A customer value commitment is value-segment specific; there isn¡¦t a ¡§one size fits all.¡¨ ¡§Targeted¡¨ means that customer value segments have been identified and selected as viable, i.e., in which you can create customer value while making a profit. ¡§Superior¡¨ means delivering more value than competitor offerings. The customer value commitment must be economically profitable because you¡¦re in business to make a profit.
Crafting customer value commitments defines what business resources are critical and which aren¡¦t to winning business in the targeted customer value segments. This enables you to focus on specific value creating factors, resource accordingly and achieve the superior value position with customers.
Creating value for customers has a cost associated with it. Value-driven companies earn a profit by building their value upon the most important customer benefits and discipline themselves to NOT provide items of little or no value to the customer. If you offer all features and all services to all customers or if your customer value commitments to different customer value segments are not clearly different, you haven¡¦t gained enough insight about the customers¡¦ value expectations and your profit drivers.
It¡¦s important to reinforce the fact that one customer value commitment isn¡¦t enough even for a company with a single product. The CVM view of the customer is ¡§any member of the value chain who directly or indirectly purchases or influences the purchase of our offering¡¨. In many instances you may be confronted with a complex value chain in which you must address several value chain members, each with their own unique value set, demanding you to address that value set with a unique customer value commitment.
Create Customer Value: Create
Any business big or small succeeds initially because it brings a product or service to the market for which a number of people in the market are willing to pay. Either by instinct or deliberate planning or chance or a combination of all three, the business offering has value for a group of customers interested in what was being offered.
After the initial introduction, when the newness of the product or service has worn off and the innovator buyers have gone away, the real work of differentiation begins. Offerings now have to have value for customers, value which is superior to the customer value commitment offered by competitors. And you must continually create, deliver and improve the value promised. This is the basis for sustainable growth and profit, which we call Customer Value Management.
Create has five major actions:
1. Develop a customer value commitment culture.
The customer value commitment has to be more than a slogan; it has to be expected, normative behaviour throughout the organization, a commitment that the workforce is empowered to implement. Every customer touch point is an opportunity to create or destroy value.
2. Define the customer value processes.
Identify what is needed to deliver the customer value commitment and define all the processes, sub-processes and individual activities that must be in place to deliver customer value from understanding the customer, to creating customer commitment to converting that customer commitment into an implemented customer value to assessing the customers¡¦ levels of satisfaction with your customer commitment to continuously improving your commitment in line with changing customer values and to stay ahead of competition in delivering the desired value to the customer.
3. Populate the customer value processes.
The people skills and competencies necessary for a customer value culture have to be defined and acquired. Your people have to be deployed, trained and developed in the customer value culture and should be empowered and rewarded accordingly.
4. Invest in appropriate infrastructure.
To deliver customer value you have invest in the infrastructure, this may be infrastructure to create and support the physical, service and intangible elements of your customer value commitment, it may be to select and manage appropriate value channels which deliver the value to the customer and it may include knowledge management systems to support your customer value creation.
5. Implement customer value cost-effectively and efficiently.
Having understood, designed and created your customer value commitment, you have achieved nothing until it is implemented effectively. Implementation actions should be linked directly to the key elements of the customer value commitment and have to be clearly defined, planned, prioritized, communicated and agreed to.
An odd thing happens to most businesses as they grow and evolve--management tends to become less concerned about value being delivered to customers and more concerned with maximizing business operations. Business becomes more competitive, customers seem more recalcitrant, margins are squeezed and re-organization becomes the rule rather than the exception. Every customer value segment has specific elements of its value set that ¡V if fulfilled ¡V will attract a non-price sensitive response. The key is to identify these elements.
Once the value expectations of customers are understood, the company must create internal alignment to deliver the expected value. This means that all parts of the organization must understand its contribution to customer value. The workforce must be empowered to create and deliver customer value, to which everyone's compensation must be linked. Skills and competencies must be in place to create and deliver customer value, and customer feedback and KPIs (Key Performance Indicators) must be communicated to all parts of the organization regularly. But first and foremost the customer culture MUST be led from the top.
Obtain Customer Feedback: Assess
It¡¦s been calculated that the cost of winning a new customer is somewhere between five and 20 TIMES greater than retaining an existing customer, depending upon the nature of your business. But most companies don¡¦t know exactly why business was won or lost; overlooked is a detailed and rigorous examination of won-lost business. The more undifferentiated or ¡§commoditized¡¨ a business is or the more a business is being driven toward competitive tendering, the more critical it is to track and monitor the reasons for business success and/or failure.
A number of our clients can¡¦t answer the question, ¡§How did you get the business?¡¨ or ¡§Why did you lose the business?¡¨ They¡¦re so focused on the next sale, the next transaction that the reason business was won or lost is moot. It just ¡§is.¡¨
Assess has five major actions:
1. Track won and lost business.
The reasons for won and lost business must be examined rigorously, systematically and regularly, preferably by an objective won-and-lost business manager.
2. Proactively seek customer feedback.
All customer interfaces should be identified and integrated into appropriate feedback systems which track meaningful measures.
3. Manage and resolve customer queries and complaints.
Analysis isn¡¦t beneficial without implementing corrective actions.
4. Regularly and independently assess your performance against customer expectations.
In addition to regular direct contact with customers, we also recommend obtaining feedback via independent third parties. A key is to communicate the results internally and to your customers so that the value commitment is understood.
5. Combine and integrate to for improve your customer value commitment.
Regular analysis helps identify what you are doing well that you can reinforce and repeat and identify the gaps in your value performance against customer expectations and permits the implementation of appropriate corrective actions.
The fourth step in Customer Value Management is essential to make sure that Steps 1, 2 and 3 have value for the customer and are profitable for you. Step 4 is all about assessment, obtaining customer feedback in several forms and from several sources. This enables you to validate that (1) the value being delivered to the customers in a customer value segment at least is in line with and, preferably, is exceeding their expectations and (2) you are proactively identifying the shifts, changes and evolution of your customers¡¦ value expectations.
Tracking won and lost business is a proactive process that requires a culture that seeks out and acquires answers to the questions of why business was won and lost. And it calls for a dynamic planning process that is responsive rather than inert.
Step 4 has to be integrated with the other four steps ¡V each is important to sustaining growth and profit as part of Customer Value Management.
Step 4 is a formal step to catch something that has been done very well or something that has been missed.
Whether through experience or intuition we all know that only one of 26 customers with a problem tells you about it; this is an ¡§activist,¡¨ a customer who brings a problem to your attention with the expectation that you¡¦ll correct it. The other 25 are ¡§terrorists,¡¨ telling stories about the value that wasn¡¦t delivered without giving you an opportunity to correct the situation. A satisfied customer tells five others about the value it received. Of your unhappy customers, 91% will never purchase from you again, and they will tell everyone else why except you.
The key is to ensure that someone in your organization feels responsible for that customer and feels empowered to represent the customer within your organization. The more important the customer, the more senior the account manager should be. In some companies, there may be a case for a cadre of senior corporate account managers, handling very large accounts with multiple business unit and functional interfaces.
The customer account managers should be responsible for providing feedback for each stage of Customer Value Management. No customer is so unimportant as to not warrant an account manager. That means every customer is important enough to warrant an account manager.
Measure and Improve Value: Improve
Customer Value Management is dynamic and continuous, driven by the fact that customers¡¦ needs and value expectations are dynamic, not static. The value ratio changes with time, as Desired Benefits and Relative Costs are satisfied, new value expectations appear. Planning to provide the same value for your customer value segments next year that you did this year by definition reduces the value you provide and they will derive. You were originally selected as a supplier because you provided superior value. But your customers¡¦ needs have moved on and your competitors¡¦ offerings have improved. Next year they need something new and better from you.
Improve has five major actions:
1. Spot the gaps and the ¡§quick-hits¡¨.
These are items arising from an analysis of the regular and systematic measures, which need to be in place to track results and performance on customer value.
2. Challenge customer understanding.
Customer value needs and expectations are dynamic, not static.
3. Re-define your customer value commitment.
Changes in customer value expectations demand a re-definition of your customer value commitment.
4. Improve your customer value.
As value needs are fulfilled, the value ratio changes.
5. Anticipate change.
Your customer value commitment results in a better understanding of future customer value needs and expectations. Your ability to anticipate these changes enhances the value of your customer commitment.
In Customer Value Management for sustainable growth and profit Step 5 is about questions that need to be asked and answered to enable you to enhance your customer value commitments by formally updating your understanding of your customers¡¦ needs and expectations, by choosing to make the needed improvements where there are gaps. The feedback obtained in Step 4 may require you to go back to Step 1 and ask, ¡§What don¡¦t I understand about the customer?¡¨ It may require a recommitment to value or improvement in the way you create value. It may require you to change the feedback mechanisms in Step 4. You may have to say, ¡§We¡¦re not understanding the unmet needs of the customer. We¡¦re not asking the right questions.¡¨
Measure and Improve means auditing and evaluating customer value segments for their marketing impact and their ability to provide profitability. It means anticipating customers¡¦ changing needs and expectations by identifying future trends, which is also required to maintain a position as a value leader.
Businesses often measures the wrong things about customers because the business has created the wrong perspective on its customer, such as believing a better product is better for customers, when in some cases a better price with the existing product is what the customer really will value.
This is the time to be brutally honest and ask, ¡§If I was in the position of my customer, how would I do what they are trying to do?¡¨ Forget about having best most wonderful product. What is the customer trying to do, why are they doing it and how could it be done better needs to be the focus.
One of our chemical company clients had conducted a comprehensive study of their end-user customers and had identified four need- and behaviour-based customer value segments:
Committed Switchers Strugglers Complacent
For each customer value segment the company had developed a clear customer value commitment and were implementing a well-defined strategy in each customer value segment, described in the figure below
The new strategies were working well, and the business was being transformed to be much more focused and more profitable. But after two to three years, it became apparent that the least successful part of the client¡¦s customer value commitment strategy was ¡§STOP the switchers¡¨.
This discovery caused the company to re-assess its segmentation and identify a new customer value segment that needed to be addressed, the Goners. These were former Switcher customers the client had failed to stop from switching. Based on this insight, a new customer value commitment was created called ¡§WIN BACK the goners,¡¨.
Today¡¦s Customer Value Managers operate in a world of constant and often rapid change. The dynamics of societies, economies, markets, companies, customers, potential customers and competitors impact the success or otherwise of the Customer Value Manager¡¦s strategies, commitments and plans. The effective Customer Value Manager needs to have highly efficient change radar in place to be able to anticipate and respond to these changes.
This means having regular interactive dialogs with customers and asking pertinent questions about their future. This means conducting regular economic and market research to anticipate changes in the macro picture. This means monitoring competitor activities closely and regularly reviewing and assessing competitor strategies. All of these activities should be an integral part of your Customer Value Management model.
We¡¦ve all seen planning processes and systems fail because they become a ¡§fill-in-the blanks¡¨ exercise. Planning is a serious process, demanding a high level of analysis and dynamic creativity in the interpretation of data and the development of scenarios, not forgetting the development of your own strategies in the light of the scenarios.
The key to anticipating how value expectations and your value commitment will change in the future is to measure the impact your customer value commitment is having on your customer value segments and their businesses. This is the most critical leading indicator of performance and yet often the least measured item. Measuring the impact of your current customer value commitments provides insight into your customers¡¦ current decisions, and future intent and value needs.
Customer Value Management demands discipline:
„H A discipline to understand the customer and the value set of the customer that drives their needs, their buying decisions and buying behaviour.
„H A discipline to build a commitment to the customer in direct response to that value set that drives their buying decisions and behaviour.
„H A discipline to design and develop your organization, your people resources and other infrastructure based on your customer value commitment to ensure the relevance of these elements to the creation of customer value.
„H A discipline to regularly and rigorously obtain feedback from your customers about your customer value commitment and customer value creation.
„H A discipline to measure your performance using the customer¡¦s scorecard rather than your own.
„H A discipline to never rest on your laurels, to always be looking for way to improve your understanding of the customer value segments¡¦ needs and expectations and your customer value commitment.
„H A discipline to plan rigorously around the changing needs and values of customers and to manage and transform your business, business model and your organization based on the changing needs and values of your chosen target customers
In addition, Customer Value Management demands a mind-set focused on the understanding of customers and the creative application to developing differentiated customer value commitments to create value for chosen customers.
Checklist: CVM Step 1: Discover - Understand the Customer
1. Have you defined and mapped the market? Look at your market and the value offerings in the market through the eyes of the customer. Understand customer choices and the reasons for those choices.
2. Have you developed a clear understanding of your customers' value needs and expectations? Identify the value sought by the customer value segment and quantify the value to the customer of that value.
3. Have you discovered customer value segments built around similar values? Seek unmet needs relentlessly and segment according to customer needs.
4. Do you know how customers in a customer value segment perceive and value your customer value commitment versus that of your competition? Base your assessment of your relative competitive advantage on the customers¡¦ perception and judgment of your customer value commitment and competing offerings.
5. How have you targeted customer value segments? Target only those customer value segments where you have or can build a competitive advantage that the customer recognizes and values. Only serve customer value segments whose lifetime value is positive and high.
Checklist: CVM Step 2: Commit - Commit to the Customer
For each target segment
1. Have you defined and quantified your segment strategy based on selecting the value disciplines on which you¡¦ve chosen to compete?
2. Have you developed differentiated customer value commitments for the targeted value segments?
3. Are you able to fill the capability gaps in your customer value commitments?
4. Have you enabled the clear commitment to fulfil customer value needs and expectations by creating standards of service, business rules and exceptions and communicated these to the value segments and internally within your own company?
5. Have you defined the relevant Key Performance Indicators (KPIs) to track and the appropriate performance measures, benchmarks?
Checklist: CVM Step 3 Create - Create Customer Value
1. Have you developed a customer culture throughout the organization and empowered the workforce to implement it?
2. Have you defined the key customer value processes?
3. Have you populated your customer value processes by defining the requisite people skills and competencies, deploying people resources, training and developing the staff and measuring and compensating for value performance?
4. Have you invested in an infrastructure to deliver customer value by building knowledge management systems, defining a channel strategy and selecting channel partners and using e-Commerce where appropriate?
5. Have you implemented a customer value orientation by empowering your people, planning and prioritizing your actions, defining and implementing organizational structure to support customer value and deploying it?
Checklist: CVM Step 4: Assess - Obtain Customer Feedback
1. Are you tracking and analyzing won and lost business?
2. Are you seeking proactively customer feedback by identifying all customer interfaces and developing appropriate feedback systems, tracking measures?
3. Are you organised to manage and resolve efficiently customer queries and complaints and implement corrective actions?
4. Are you regularly assessing customer satisfaction through external research and communicating the results internally and to your customers?
5. Are you analyzing all customer feedback, identifying the gaps in performance against customer expectations and implementing appropriate corrective actions?
Checklist: CVM Step 5: Improve - Measure and Improve Value
1. Are you measuring and reporting the KPIs, identifying the performance gaps and defining the necessary improvements?
2. Are you challenging your understanding of the customer by improved customer research that improves your customer knowledge, sharing customer data and critically reviewing your market segmentation?
3. Do you regularly re-define your commitment to customers by updating, enriching your customer value commitments, service standards and KPIs?
4. Are you consistently working to improve your customer-focused culture by refining your customer value processes, the population of them and the infrastructure to support them?
5. Do you anticipate change by working to identify future trends and changes, creating and analyzing business scenarios, developing contingency plans and managing change effectively?
Watch this space to learn more about creating sustainable business profitability through better Customer Value Management.
Sustainable Business Growth and Profitability with Customer Value Management - To learn more about this author, visit Phil Allen's Website.
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David AchesonDavid Acheson is the founder of DCJA Consultancy. DCJA Consultancy is a management consultancy business specialising in B2B sales consultancy. They offer bespoke and packaged sales consultancy including Sales Optimisation Review, Interim Sales Management, Sales & Marketing Review, 1:1 Sales & Management Staff Analysis, Management Training, Solution Sales Training, Creation of New Pay Plan, KPI's, run Customer Feedback Campaigns, assist with Recruitment, Coaching, Appraisals and set up Strategic Marketing Campaigns. David spent his early career in accountancy and then moved into sales in 1982, working in Office Equipment, IT, Advertising, Training, Outsourcing and Consultancy. He has held many Senior Positions in SMBs and Global Organisations including Head of Sales Operations & Head of Business Development. His knowledge, skills and great experience of the Sales Industry has led to David making keynote speeches and running educational sessions to key businesses through organisations including The Chamber of Commerce and Business Link. - Visit David Acheson's Website |
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Leanne Hoagland-SmithAre your sales where you want them to be? Will you be one of the few who achieves sales or business success or one of the many who have failed to change? Are you tired of being told you are like everyone else? Then you may find my first book on sales of interest. Be the Red Jacket in the Sea of Gray Suits, The Keys to Unlocking Sales available at Amazon or at http://www.processspecialist.com/red-jacket.htm. This book is a reflection of my no-nonsense approach to improving sales to overall business results. If you are truly committed to making sustainable changes, then I can help you secure a positive return on your investment because I focus on executable solutions not telling you the problems you already know you have. From training to corporate (group) coaching to executive one on one coaching, my approach is to assess, create awareness, build a goal driven action plan and then execute. The bottom line question is "Not do you or your employees know it, but do you or they want to do it?" Please call for a free strategy session at 219.759.5601. - Visit Leanne Hoagland-Smith's Website |
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Dave KurlanDave Kurlan is the founder and CEO of Objective Management Group, Inc., the industry leader in sales assessments and sales force evaluations, and the CEO of David Kurlan & Associates, Inc., a consulting firm specializing in sales force development. Dave has been a top rated speaker at Inc. Magazine's Conference on Growing the Company, the Sales & Marketing Management Conference and the Gazelles Sales & Marketing Summit. He has been featured on radio and TV, including World Business Review with General Norman Schwarzkopf, in Inc. Magazine, Selling Power Magazine, Sales & Marketing Management Magazine and Incentive Magazine. He is the author of Mindless Selling and Baseline Selling – How to Become a Sales Superstar by Using What You Already Know about the Game of Baseball. He created and wrote STAR, a proprietary recruiting process for hiring great salespeople, and he writes Understanding the Sales Force, a popular business Blog and is a contributing author to The Death of 20th Century Selling and 101 Great Ways to Improve Your Life, Volume 2. - Visit Dave Kurlan's Website |
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Jeff FosterWebBizIdeas.com is a Minneapolis website design company founded to help people start an internet business by providing them with website, business, and internet resources that help foster the growth of successful online businesses and develop innovative Internet business ideas. We specialize in internet consulting & internet marketing. - Visit Jeff Foster's Website |
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Linda RichardsonLinda Richardson is the Founder and Executive Chairwoman of Richardson, a global sales training and performance improvement company. As a recognized leader in the industry, she has won the coveted Stevie Award for Lifetime Achievement in Sales Excellence and she was identified by Training Industry, Inc. as one of the “Top 20 Most Influential Training Professionals.” Ms. Richardson is credited with the movement to Consultative Selling and is the author of ten books on selling and sales management, including Sales Coaching — Making the Great Leap from Sales Manager to Sales Coach, and Stop Telling, Start Selling. She teaches sales and management at the Wharton Graduate School of the University of Pennsylvania and the Wharton Executive Development Center. Linda is a frequent speaker at industry and client conferences, has been published extensively in industry and training journals, and has been featured in numerous publications, including The Wall Street Journal, Forbes, Nation’s Business, Selling Power, Success, and The Conference Board Magazine. Learn more about Richardson's sales training and performance improvement solutions at http://www.richardson.com web - Visit Linda Richardson's Website |
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Stephanie RobeyStephanie Robey is President and CoFounder of Pivot Positive, LLC - an Internet marketing business focused on helping people start work at home ventures. Previously, she was employed at The Search Agency with over 20 years experience in graphic design and 10 years experience in online marketing. She was responsible for launching the Conversion Path Optimization (CPO) unit where she and her team have conducted hundreds of optimization tests for online companies across multiple verticals. She is a successful entrepreneur having started and sold 2 companies and remains on the board of directors of the third, PhotoSpin.com Stephanie began her career in the direct marketing realm creating and producing direct mail for many of the major cable television companies and directly attributes her understanding of Internet marketing to those early offline experiences. Stephanie is a graduate of San Diego State University with a BFA in Graphic Arts and also holds an Executive MBA from the Graziadio School of Business and Management at Pepperdine University. Read Steph's Blog Meet Steph and Dave Sign up for our Free 7-Day BootCamp: Self Employed & Rich - Visit Stephanie Robey's Website |
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David BarrDavid Barr is the President of Venture Opportunities, Inc. David has been a professional business broker/intermediary since 1980 focusing on General Business Brokerage and Mergers and Acquisitions representing client transaction value from $400,000 to $20,000,000. Mr. Barr has handled the sale of over four hundred and fifty companies. David earned a university degree from the State University of New York majoring in economics and business. David holds the Mergers and Acquisition Master Intermediary and the Certified Business Intermediary designations from the International Business Brokers Association. He is also a Senior Business Analyst and a Texas licensed Real Estate Agent. For more information about David and Venture Opportunities, visit www.bizdealmaker.com. - Visit David Barr's Website |
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Anne BarrAnne Barr has over 26 years experience in sales and marketing, six years as a franchisee. She has assisted over 367 business owners and purchasers to achieve their goals in career change, transition and exit strategy. She holds the designation of Certified Franchise Executive from the International Franchise Association, Certified Business Intermediary from the International Business Brokers Association and Board Certified Broker from the Texas Association of Business Brokers. Anne is active in professional organizations, networking groups and volunteers for non-profit entities. As owner/operator of four successful businesses, Anne has proven people skills and enjoys helping clients find the right "fit" in business ownership. Visit www.FranchiseOpportunitySpecialist.com for more information about me and my company. - Visit Anne Barr's Website |
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