Many companies still do not have a proper grasp of customer profitability in their business. They still rate customer value by revenue or product take-up only and are mainly focused on product profitability and campaign ROI.
This can lead to situations where the company:
- Struggles to build the business case for client experience improvement or the overall CRM strategy
- Makes wrong assumptions about who their “best” customers are
- Doesn’t know what proportion of the client base is marginal or unprofitable
- Compounds unprofitability by continuing to spend budget on segments with low potential or managing low value customers via a high-cost service model
- Underinvests in and under-appreciates high value customers
- Tries to win back bad business!
CVM enables you to define what customer profitability means and then develop analysis and modelling tools to enable customer profitability to power marketing and sales initiatives.
Working in close conjunction with all the functional and finance departments involved, we adopt a five-step approach:
- Customer Value Information Review
- Value Definitions and CVM Matrix Production
- Value Analysis Tool Creation
- Value Modeller Creation
- Value Analysis & Modelling
This approach is ideally deployed in parallel with a capability assessment (CAA®), and delivers a comprehensive set of analysis reports that dig deep into the drivers of customer value in distinct and logical value groups. It helps fix the issues mentioned, and its modelling capability enables ROI to be forecasted based on the true drivers of customer value – retention, acquisition, cross-sell, cost-to-serve, etc.
CUSTOMER VALUE MANAGEMENT (CVM)
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Customer Value Management
Define what customer profitability means and develop analysis and modelling tools to enable customer profitability.
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