CVM – how to get started? Companies that possess two or more of these business characteristics can typically benefit from CVM
Do a pilot test in order to configure the concept to fit your company, and validate if you stand to gain enough from the benefits vis-à-vis the required investments
Have a fragmented B2B customer base
1
Define which of your customer cross-sections it is the most relevant to investigate – across geography, channels (direct/wholesalers) and segments, and ensure you have the few key individuals on board early on in the process.
Rely on direct sales to end users
2
Define whether you should aim for CPL or CLV and prepare the data for analysis. Without defining the right data set from the start, the chances of capturing the full potential of CVM are low.
Have a large proportion of overhead service costs
3
Establish a new picture of customer value, and tabulate with current resource allocation and market position. This is not a finance-driven exercise, but an extensive iteration with account managers and the sales force (workshops and one-to-one meetings) to validate the hypotheses.
Face large diversity in customer loyalty
4
Define your company’s CVM model – making explicit choices on the basis of the analysis, i.e. do we need to reallocate our resources, and how we currently perceive our customers?
Face large fluctuations in sales per transaction
5
Educate and train the account managers/sales force in these new insights. This involves preparing new revised budgets and aligned incentives.
Face large diversity in customer service needs
6
Prepare the roll-out, i.e. document key learnings from the pilot phase, document the performance effects of implementation and prepare to roll out in other relevant parts of the company.
Customer Value Management (CVM) is a strong lever to sustainable value creation 1
2
3
4
Customer orientation is all about understanding and managing both the value companies create for customers and the value customers create for companies
Customer orientation
Although many companies perceive themselves as customer-oriented, it is not that common to manage the "value to company" dimensions of customer orientation
Customer orientation
Measuring customer value can be challenging, and many perceive high investment and complexity and uncertain benefit as barriers to pursue CVM
Barriers to adapting CVM
However, the companies that succeed in breaking down the barriers are rewarded financially and seem to be more resistant to market turbulence
Average Return on Assets Per cent
Company value to customers
Customer value to company
Measurement of customer value
84.7%
Implementing CVM requires investments
CVM provides no significant improvement
Not using CVM
Customeroriented
CVM is too complicated
38.0% Using CVM
CVM provides an incorrect estimate
The proposed Quantifying benefits of customer value implementing does not CVM are too correspond well uncertain with our culture
Average ROA – 2007-2010 Per cent 10.2 7.0
2.9
7.5 2.3
Using CVM
Top management will not support CVM
Recent adopters Non-adopters
5.7 2006
2009