Tag Archives: Customer Value

Valuing Customer Value Management

Customer Value Management (CVM) is widely undervalued in the way we practice customer experience management (CEM). Excellent resources on the CVM topic abound, yet few executives &#8212 and even few CEM professionals — are aware of them. Sometimes CVM seems too quantitative or difficult to grasp or implement, but the companies that have distilled customer value management principles are certainly reaping higher value for their stakeholders, especially customers! In addition to step-by-step calculations for customer lifetime value, return on customer, customer equity, customer value-added, and other essential metrics, CVM literature provides practical advice that is absolutely necessary for managing customer experience right.

Firms of Endearment (by Sisodia, Sheth & Wolfe) explains how "endearing companies tend to be enduring companies". By asking a broad sample of people which companies they love, and then working backward to identify those companies’ collective, distinctive set of core values, policies, and operating attributes — and then their return on equity — amazing findings resulted. The firms of endearment (FoE) list includes the usual suspects, and then some: Amazon, BMW, Caterpillar, Google, Harley Davidson, IDEO, IKEA, JetBlue, Johnson & Johnson, LL Bean, REI, Trader Joe’s, UPS — to name a few. "They actively align the interests of all stakeholder groups, not just balance them … and can do seemingly contradictory things such as pay high wages, charge low prices, and get higher profitability." Indeed, the financials seal the deal: " the public FoEs returned 1,026 percent for investors over the 10 years ending June 30, 2006, compared to 122 percent for the S&P 500; that’s more than a 8-to-1 ratio! Over a 10-year horizon, FoEs outperformed the Good to Great companies by a 3.1-to-1 ratio." Continue reading

Customer Value Creation Essentials

Value creation is perhaps the single most important aspect of any executive’s job. As such, crystal clarity on what it is and how it’s done should certainly be top of mind. Shareholder value is fueled by customer value; shareholders leave when customers leave, not the other way around. Customer value is an ambiguous term, as it can be used either from the company’s or the customer’s perspective. Few companies know the lifetime value of their customers, or collective customer equity, and more importantly, fewer still know how much customers value their brand, and why.

Why care about how much customers value your brand? Because the customer view of the company’s value is a predictor of market share and shareholder value. Vodafone’s Graham Maher, Managing Director, says “The Customer Value Management (CVM) score is a leading indicator of Vodafone’s market share. We were able to predict market share a quarter out using CVM data, to within 1% accuracy! In fact, the Finance Director said the CVM score is more robust than any of our financial Continue reading

Customer-Centricity by Discerning Customer Satisfaction Outcomes vs. Enablers

What’s the difference between the way customers volunteer feedback versus the way they’re requested to give feedback? One revolves around outcomes in the customer’s world, whereas the other revolves around customer satisfaction enablers in the company’s world. True customer-centricity requires primary focus and decision motivations be centered on the customer’s world, rather than the company’s.

What Are “Outcomes” in the Customer’s World?
The concept of customers’ desired outcomes throughout the customer experience originated in innovation literature when Clayton Christensen wrote his book, The Innovator’s Dilemma, explaining that customers “hire” a product or service to get something done for them. When we understand the circumstances motivating the customer to hire a product or service, then we gain insight into the customer’s jobs-to-be-done.

A great way to identify customers’ desired outcomes throughout the customer experience is to Continue reading

What’s Your Customer Experience Value Quotient?

Customer ValueIf value is defined as benefits versus costs, what’s your company's customer experience value ratio? Superior value is the objective of customers and marketers alike. And since customers hold the purse strings, marketers are compelled to view value as customers do. In the customer experience value ratio, the numerator includes product and service value, as well as image and personal value. We may often overlook or be unaware of some of the cost dimensions in the denominator: money … plus time, energy and psychic costs.

In managing customer experience, the challenge is not only to maximize the numerator, but also to minimize the denominator. Touch-point analysis can be very helpful, but make sure Continue reading

Measure Customer Value the Customer’s Way

Customers automatically use 50 or more metrics for any customer experience, according to author Anthony Ulwick, in his book What Customers Want. We may be re-inventing the wheel as we strive to come up with customer metrics that spell success. Looking at things from the customer viewpoint we've got to admit that customers really do know what outcomes they want.

"It's easy to portray customers as emotional, illogical individuals who are incapable of knowing or communicating what they want", says Ulwick. "This is a convenient way to avoid taking actions that are inconsistent with one's own thinking, intuition and personal motivations." Despite financial pressures to take our focus off direct inputs from customers, it’s essential to avoid Continue reading

Customer Experience: A Lucrative Opportunity for Marketers

Ability to grow a business is what distinguishes a truly great marketer, according to an article by consulting firm Booz Allen Hamilton: "In an era of unlimited opportunities but constrained resources, the only marketing metric that matters is growth. Driving growth means stretching the traditional boundaries of the marketing function to encompass activities many companies don’t even think of as marketing — yet."

If growth is the only marketing metric that matters, how can growth best be measured and impacted? Growth is commonly measured as revenue, profit, or market share. Some firms also measure growth as brand equity and customer lifetime value (CLV). As authors such as Peppers & Rogers point out, CLV can be viewed as a composite measure of revenue, profit, market share and brand equity. CLV may be Continue reading