Customer Value Management: The Ultimate Guide - SmartKarrot Blog

Customer Value Management: The Ultimate Guide

What is customer value management and why is it so important? Does it help the customer or the company or both? Read on to get insights and information on the same.

Customer Value Management: The Ultimate Guide
Customer Value Management: The Ultimate Guide

The last decade saw the birth and rise of markets, management, and hunger of customers. One recent addition to that list is the growth of customer value management (CVM) which hasn’t taken any backseats over the years. As the backbone of any given business resides with the customers, it makes sense to showcase value to them and understand and influence customer behavior.

And why shouldn’t be that the case? Customers are subjected to a multitude of engaging options every now and then to choose from. The remote is now unmistakably in their hands to decide whether or not to seal the deal. Here, in this blog, we will walk you through the ins and outs of customer value management and delve into its bits. Without any further ado, let us begin right away.

Table of Contents

  • What is Customer Value Management?
  • How is Customer Value Management measured and calculated?
  • Why is Customer Value Management Important?
  • How does CVM benefit other Departments in an Organization?
  • Three Stages of Customer Value Management Journey

What is Customer Value Management?

Customer value management is the process of managing and optimizing the facets of a value journey that a customer takes from their first interaction to the last one. It is designed to align your brand’s tonality and messages with that of the customer. For this, you will need to determine the interests and needs of a customer first and then strive to deliver value with it.

How is Customer Value Management measured and calculated?

How is Customer Value Management measured and calculated
Source: LinkedIn

Customer Value is defined as the perceived worth of your offer divided by the perceived worth of the competitor’s offers. Here, a simple calculation yields a ratio score around a parity score of 1 when linking business with the competition. The higher the score over 1, the greater the relative competitive advantage for that company, and as the score falls below 1 the greater the level of competitive weakness. As you can see, any score above 1, denotes that your offerings are world-class and that you enjoy a competitive advantage. However, a score below that would simply mean you might just run out of business pretty soon if you don’t revamp.

Why is Customer Value Management Important?

  • CVM renders stellar insights and information about the customer that can be used to acquire and retain them and drive customer behavior where the value of both the existing clients and future prospects can be optimized.
  • It also zeroes in on the customer data and seeks data-driven ways to augment the value delivered to the customer.
  • It is a powerful business tool as it can seamlessly link the KPIs to the clients by measuring the factors that drive purchasing behavior and look into metrics such as market share, profit and loss, ROI etc.
  • It ropes in accountability to the marketing programs and aids in mapping business goals with the marketing goals.
  • It is instrumental in business development with key benefits in marketing strategy, relationship marketing, customer database management, and sales management.

How does CVM benefit other Departments in an Organization?

How CVM benefit other Departments in an Organization
Source: decisionlink
  1. Marketing: CVM assists the marketers in delivering more sales-oriented leads with a greater tendency to purchase, resulting in augmented leads all through the funnel. Also, it provides value-based insights to come up with stellar content and other important collateral. Further, it allows the Marketing teams to automatically generate Case Studies based on actual customer outcomes, thus enhancing the credibility and relevancy to each user.
  2. Sales: CVM allows the leaders to lessen discount levels, improve win rates, accelerate deal velocity, and increase deal size while differentiating from the competition and elevating conversations to the C-Suite.
  3. Customer Success: CVM provides visibility to the promises made in the sales cycle to make sure that value is regulated and steadily observed to imbue product adoption and satisfaction.
  4. Partners: CVM provides Channel Teams and Partners the capacity to correctly differentiate from the competition by deploying the total economic value impact of their solution with an easy-to-use interface that reps can easily leverage to articulate the products’ unique benefit.

Three Stages of Customer Value Management Journey

  1. Value Discovery: Both, the company and the customer need a reason to support a meaningful relationship that helps both parties. Customers need value from your given solutions and the company wants to gain unique insights into the customer’s needs. This way, both parties discover value from each other.
  2. Value Delivery: Once you discover what the customer wants from you, it is time to plant an action plan around it. For that, it is vital to ascertain the solutions that benefit the customer. Then, you will have to quantify them to create a transparent business case that strives to provide the customers the potential value and gives you a chance to steer away from the other competitions.
  3. Value Realization: With value realization, you measure the actual value and help the customer see the showcased business value. When the customer is in this third stage of the customer value management journey, they tend to stick around more, lead to more satisfaction and pave the way to upsells and cross-sell opportunities. Adding relevant customer testimonials will fuel the value models with continued refinement.

Parting Thoughts

Customer Value Management is crucial to your business if you want definite success. To manage the aspects that drive value, a company will need to put up their customer’s perception and also the perceived performance of their competitions to thrive well in the rat race. When they see the desired valued that they wished to, only then will come a chance where your business prospers. Always take note of the fact that value can be improved by enhancing the relative perceived quality, the relative perceived price or by using a tough combination of both mentioned.

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