Customer Value Management

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Customer Value Management - CVM

Your customer base is your most valuable strategic asset. Unlocking its full potential is fundamental for sustainable business growth. This is where Customer Value Management, CVM, comes into play. The basis for this strategy is to shift focus from the quantity of customers to the quality of customers, understanding and maximizing the value each customer contributes. It’s all about using and analyzing data to identify customers which could generate more value. The job is to create superior customer value in the mind of the customer. This in turn will provide your business with more value from each customer and thus increase the value of your entire customer base.

In conjunction with Customer Relationship Management, CRM, which focuses on how you manage the interaction with potential and current customers, with an emphasis on developing long-term customer retention, you can focus on creating a customer-centric business, drive growth, nurture brand loyalty, and ultimately increase revenue and profit.

Customer Value Management – What is it?

Customer value management is a business strategy which is focused on maximizing the value delivered to each customer and thereby making sure that each customer delivers maximum value to your business during their entire customer lifecycle, expressed as the Customer Lifetime Value (CLV).

This approach is used to represent the value throughout the buyer and customer journeys (yes, they are actually two separate journeys) and assists in the development of best practices to create value at each step of the journeys.

CVM encompasses all interactions from lead management to prospect management, to the first buy to the most recent interaction, whether it’s a customer service contact, new buy, invoice etc. By assessing the value during this entire cycle, you’re able to measure the value you create for the customer, and the value they contribute to your business.

CVM and CLV – Why should you care?

Nowadays it’s more important than ever that the customer feel that they are getting value for the money they pay. If buyer’s remorse kicks in, you as the supplier is in a bad place. The customer will be very reluctant to buy from you anymore and even worse, happy to spread the word of the bad experience. Remember, it only takes one bad experience, to lose a customer forever. And, even worse, loose others because of their negative word-of-mouth.

Implementing customer value management and keeping track of and increasing customer lifetime value is of vital importance these days. This is why:

Customer Retention

Satisfied customers are more likely to stay loyal to your brand. Loyalty reduces customer churn and increases customer retention rates. As you’re fully aware of these days, it’s usually more cost-effective to keep existing customers than to get new ones.

Customer Lifetime Value

Customers that engage with your business over a longer period of time usually generate a higher lifetime value. In short, they will spend more money on your business.

Positive Word-of-Mouth

Happy customers will hopefully spread the word about a great experience they had with your business and brand. Remember, it’s even more likely that a customer whom experienced something bad, will shout out to the world about it. Also, if someone should take the time to say something positive it most probably have to be a great experience. A good one is just expected as the base line for today’s customer experience.

Brand Reputation and Image

Brands with an outstanding reputation and image, are far more likely to succeed in the long-term than brands with a bad or neutral image. Trust is even more important today than ever before. If the potential customer trust you, it’s very likely that they will choose your business. In some cases, maybe even without ever considering your competition.

Reduced Customer Service Costs

Satisfied customers are more likely to avoid raising complaints and if you deliver correctly and positively from the very beginning, it’s also more likely that complaints never arise. This keeps your customer service costs to a minimum. Remember, it’s not a feasible way to reduce customer service costs on the expense of reducing the overall customer experience. Make sure to deliver a helpful inspiring customer service experience.

Employee Satisfaction and Loyalty

When customers are happy, satisfied, and loyal, it enhances your chances that your employees also will be more happy, satisfied and loyal. They feel like they really can have a positive impact and if you emphasize customer value throughout your organization, every employee will feel a sense of urgency to deliver actual customer value. It’s important that this is communicated to every employee, regardless of if they have direct or indirect contact with your potential and current customers. It’s all about delivering a great overall customer experience.

Risk Mitigation

Keeping satisfied customers lower the risk, time and cost involved when dealing with customer complaints that goes further than just a customer service ticket. Negotiations, threat of financial implications, or maybe even legal actions, are best sorted before they even ends up on the C-suite level.

Data and Analytics

- The Foundation of CVM

The actual practical work that has to be done when implementing customer value management in practice is very dependent on data and analytics. The objective is to build long-term relationships and increase share of wallet without increasing the cost of acquiring customers and to serve existing customers. Nowadays, it’s possible for businesses of all sizes to relatively easily and cost-effectively gather and analyze this data, and make it useful for measuring customer value.

The analysis of the data enables you to identify which customers to invest in, further segment your customer base and decide how to allocate your budget across customer segments. Further, you can also use this data analysis to identify what and capabilities each customer segment expect and require. This will help you get your return on investment for your CVM initiative.


To survive, grow and thrive, your business must create value for your customers. When you approach the work of creating customer value strategically, you are able to effectively develop the infrastructure, culture, strategies, and programs to optimize how your customers perceive the value you offer.

Today’s potential customers are smart and have access to more information than ever before. To be able to compete in such an environment, your business must offer maximum value and solve relevant problems efficiently. Your ability to deliver high-value solutions at the same time as you get higher value from your customer base is a competitive advantage. Implementing CVM helps you make sure that your brand is important and perceived as a high-value player in the marketplace.

Customer value management requires a bit more effort than successful customer relationship management, but it also provides more in-depth guidance to getting the most value out of your customer base. So, if you’re on the path to become customer-centric for real, we suggest you start out with CRM and evolve the initiative to CVM. Already on the way to become a customer-centric business with practical insights into CRM, well, then maybe the time has come, to move on into the CVM playground with strategies to provide superior customer value, focus on excellence and build a customer-centric (maybe even customer-obsessed) culture and business, providing excellent customer value.

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