Customer value management is one of the most essential elements of modern marketing and management practice. Interestingly, in the last few decades, we can see considerable growth in this approach. But what is CVM or customer value management and why is it so important?
Let's find out.
What is Customer Value Management?
Customer value management or CVM is related to relationship marketing. Over the years, it has emerged as a powerful business tool and using it; an organization can accurately measure its performance concerning contemporary competition such as commitment and trust. Further, it can determine what drives to create successful customer relationships.
In short, the concept of customer value management includes-
- Finding out what the customers in your target market are looking for from their vendors.
- Determining how your target customers rate the value, you provide compared to the value provided by your competitors.
- Identifying ways – what changes on your part will bring a positive impact on customers' perception.
- Deciding on factors for winning the customers, shareholders as well as employees.
- Aligning people and processes to reach a common goal and deliver value.
- Create a consistent flow of data and information to keep everybody aligned.
How to Measure Customer Value and Satisfaction?
There are several ways to measure customer value management in CRM. You can conduct a survey that asks customers a series of predefined questions regarding the perception of a product or service. And understand what value it has in the market place.
You can even arrange to ask these questions to your competitors' customers to establish the equivalent value of the competitors' offers.
This is a simple calculation and it gives a ratio score based around a parity score of 1 when your business is compared with the competition. The higher the rating above 1, the greater is the relative competitive advantage for that company. But when the score falls below 1, there is a level of competitive deficiency.
Importance of Customer Value Management
Customers are the be all and end all of every company and customer relationship management is also significant. But given to today's customers' demand in this new business environment, it is complicated to align with their needs. So it has become crucial to stress on customer satisfaction. Now the fact is, although organizations are trying to find out excellent ways to capture customer attention and understand their needs, yet most of them lack the knowledge of useful and practical ways. That is the reason it has become imperative for every modern entrepreneur to measure how well you satisfy your customer's needs.
Measuring customer value, you can build actionable plans to improve your marketing strategies and finally modify your company bottom line.
Advantages of Customer Value Management
- CVM is ideal in creating accountability for marketing programs. It also helps an organization to map marketing goals to business goals.
- Customer value management or CVM mainly focuses on the analysis of customer data and works specifically on seeking data-driven ways to enhance customer value.
- CVM or customer value management is the key to business development. It eases the launch of the new product to the market, helps to research marketing modeling, identifies marketing strategy, develops relationship marketing. In addition to that, the approach helps to create customer database management and sales management.
- The value customers receive equals to the benefits of a product or service minus its costs. You need to find out what value does your product or service create for them. Find out how much time does your customer devote to buying or using your product or service.
Here are 5 steps for customer value management: driving more business with the help of an optimized CRM:
Step 1: Discover Ways What Drives Value for Your Customers
Conduct a survey and talk to them. Find out what are their actions and reactions. Then capture data and find out what is important to your customers and what opportunities you have to help them.
Step 2: Identify Your Value Proposition and Implement Them
The value customers receive equals to the benefits of a product or service minus its costs. You need to find out what value does your product or service creates for them. Find out how much time does your customer devotes to buy or use your product or service.
Step 3: Determine the Customers To Devise More Value Relative To Competitors
Perceptions of your value compared to your competitors vary for different customers. The impression is dependent of different geographic proximity also. That is to say; one segment may find a product attribute particularly attractive while the others might not.
Step 4: Build a Winning Situation for Both Sides
The best option to improve customer value is to decide upon a price that makes it clear that customers are receiving value. Needless to say, satisfied customers perceive a lot of value in your offering and are always willing to pay more. The fact also remains that unsatisfied customers will leave, even at a low price. So, you need to create a win-win situation for both yourself as well as your customers.
Step 5: Invest Mostly On Your Best Valuable Customers
The last but not the least, distribute your sales force and your other investments to those customers and segments who can serve and offer the enormous value in return in the best way. This way you can improve your customer value and grow your business.
Also, you need to set aside your growth capital for new products and solutions that serve your best customers and has the capacity to attract more customers who are similar to your best customers.
Customer value management is extremely important if you want to excel in the competition. An effective CVM can link customers to company KPIs by directly measuring the drivers of purchasing behavior of the customers and the impact these have upon delivering KPIs. So, don't underestimate your customers, they are a source of your profits. Understand them and create your own strategies. Let Exactlly help you in determining your customer value for competent product or service innovation.