Concept of customer value its measurement and management :Concept of customer value its measurement and management


Questions to address.. :Questions to address.. What is customer value? How does one know whether value is being created in the work one does? Is it created optimally? At what cost? For whom? How can value be defined and measured? How it can be managed?


Where do customers stand? :Where do customers stand? Company’s first task -To Create Customers “Peter Drucker” Customers are Value – Maximizers They form an expectation of value and act on it, which affects both satisfaction and repurchase probability Customer value from a Marketer point of view is the customer’s economic value to the company, demand-oriented view of customer value as the company’s or its products’ value to the customer


Slide 4:Buying decisions are based on value not satisfaction


Fundamentals of Customer Value :Fundamentals of Customer Value


Slide 7:"The perceived worth of the set of benefits received by a customer in exchange for the total cost of the offering, taking into consideration available competitive offerings and pricings.“ Sawhney.M


Models of Customer Value :Models of Customer Value


Customer Value Management :Customer Value Management


Customer Value Management (Pierre Chenet) :Customer Value Management (Pierre Chenet) Basis of achieving value—Relationship with the customer Three aspects Customer perspective Employees perspective Organisation structure and its ability to deliver


The Customer’s Perspective :The Customer’s Perspective Based on two main dimensions: 1. WHAT your company does for them. (The “Problem Solving” dimension).2. HOW it does it. (The “Relationship Experience” dimension). Figure 1: A Company's Value Creation Process


Unique Value: A Customer ??? :Unique Value: A Customer ??? Customer-centric: the customer is part of the solution; The ”product” :easy to use and cost-efficient; Professional advice: everything is done to help the customer succeed in endeavours


The Employee’s Perspective :The Employee’s Perspective Earlier view--Employees as assets Employees in most industrial sectors enter into a relationship with a company and become its “intellectual shareholders” * Employee-Centricity: the employee is actively involved in the design of the solution;* Freedom of Action: means that the employee is empowered to take decisions relating to the job and act as he/she deems fit;* Personal Development: the solution enhances his/her competence and   marketability


Organisation structure assessment :Organisation structure assessment Healthy organisation -- mainly of highly trustful and committed staff -- consistently deliver high value to customers. Unhealthy organisation has many “negative” employees who do not trust the organisation and deliver low levels of performance, which affect customer value


conclusion :conclusion Value Creation must be monitored across the whole value chain from customers to employees. Concentrating on only one stakeholder prevents management from seeing the potential negative impacts in other parts of the value creation process. Continuos monitoring of cutomers,employees and organisation environment is required.


Customer value strategic model :Customer value strategic model


Slide 18:CVM in a nut shell


Slide 19:To increase revenues, organisations often focus their efforts on the acquisition of new customers. In some cases they overlook and fail to realise the potential value of existing customers


Customer life time value :Customer life time value The CLV measures the profit streams of a customer across the entire customer life cycle. Retention value Revenue Cost Acquisition cost of future customer Marketing costs represent costs of customer retention and development Sales costs include both the production costs of the goods sold and all costs of serving the customer


How to reduce the defection rate :How to reduce the defection rate The company must define and measure its retention rate Distinguish the causes of customer attrition How much profit it loses - In Individual customer it is his lifetime value. Figure out how much it would cost to reduce defection rate.