Jump to content

Customer value maximization: Difference between revisions

From Wikipedia, the free encyclopedia
Browse history interactively
← Previous editNext edit →
Content deleted Content added
VisualWikitext
wikified
cleaning up old, tagged and unsourced text. This can be reinstated with proper refs cited. One broken ref rescued.
Line 1: Line 1:
{{multiple issues|{{tone|date=March 2012}}
{{tone|date=March 2012}}
⚫
'''Customer value maximization''' ('''CVM''') is a real-time service model that, proponents say, goes beyond basic [[customer relationship management]] (CRM) capabilities, identifying and capturing maximum potential from prospects and existing customers.<ref>{{Cite book|url=https://www.worldcat.org/oclc/799019107|title=Superior customer value/ Buch.|date=2012|publisher=CRC|isbn=9781439861288|oclc=799019107}}</ref>
{{Refimprove|date=June 2017}}}}
⚫
'''Customer value maximization''' ('''CVM''') is a real-time service model that, proponents say, goes beyond basic [[customer relationship management]] (CRM) capabilities, identifying and capturing maximum potential from prospects and existing customers.<ref>{{Cite book|url=https://www.worldcat.org/oclc/799019107|title=Superior customer value/ Buch.|date=2012|publisher=CRC|isbn=9781439861288|oclc=799019107}}</ref> Proponents claim that a well-devised CVM program helps companies making profitable offers. The CVM framework uses technology, media, and measurement systems to help marketers maximize [[marketing ROI]].{{Citation needed|date=October 2017}}


== Customer-centricity ==
== Customer-centricity ==

* Customer interactions with brands have become more layered/complex due to electronic communication – [[digital communication|digital]], [[mobile phone|mobile]], and [[social media]].
* Hypercompetition and multiplicity of messages have severely impaired customer attention
* Analytics and technology can be applied to address [[consumer behavior]]
* Marketing is forced to demonstrate accountability
* Lack of human interaction with customers leads to inability to "close the sale"

These factors have made it imperative for marketing organizations to find new mechanisms to generate value from each customer interaction.{{Citation needed|date=October 2017}}

Customer value maximization shifts focus from managing products or marketing campaigns to managing the profitability of individual customers over the life of the relationship. While CVM may lead to better product offerings and more targeted campaigns, a customer value manager asks different questions compared to a traditional [[marketing manager]].
Instead of asking who will respond to a 10% off promotion, a customer value manager strives to understand who the customer is and what they can offer to increase the customer's lifetime value?


The CVM framework evaluates current methods and effectiveness, makes changes where required, and sets up a measurement system that helps in evaluating effectiveness. The CVM framework operates as a continuous process in a closed loop.<ref>{{Cite book|url=https://www.worldcat.org/oclc/300310255|title=Superior customer value in the new economy concepts and cases|last=Art.|first=Weinstein,|last2=Art.|first2=Weinstein,|date=2004|publisher=CRC Press|isbn=0203501497|oclc=300310255}}</ref>
The CVM framework evaluates current methods and effectiveness, makes changes where required, and sets up a measurement system that helps in evaluating effectiveness. The CVM framework operates as a continuous process in a closed loop.<ref>{{Cite book|url=https://www.worldcat.org/oclc/300310255|title=Superior customer value in the new economy concepts and cases|last=Art.|first=Weinstein,|last2=Art.|first2=Weinstein,|date=2004|publisher=CRC Press|isbn=0203501497|oclc=300310255}}</ref>
Line 30: Line 18:
* '''Channel-based challenges''' Most companies adopt a multi-channel strategy in order to take their products or services to their customers. Each channel- be it a store, online, mobile etc. needs to be tackled in a different way to ensure maximization of results. In addition to this channel, cannibalization should also not happen.<ref>{{Cite news|url=https://blog.hubspot.com/blog/tabid/6307/bid/33820/5-major-challenges-marketers-face-and-how-to-solve-them.aspx#sm.000o4u5vs14d1d24qtf12erw39363|title=7 of the Top Marketing Challenges Marketers Face Today [New Data]|last=Kolowich|first=Lindsay|access-date=2017-05-16|language=en}}</ref>
* '''Channel-based challenges''' Most companies adopt a multi-channel strategy in order to take their products or services to their customers. Each channel- be it a store, online, mobile etc. needs to be tackled in a different way to ensure maximization of results. In addition to this channel, cannibalization should also not happen.<ref>{{Cite news|url=https://blog.hubspot.com/blog/tabid/6307/bid/33820/5-major-challenges-marketers-face-and-how-to-solve-them.aspx#sm.000o4u5vs14d1d24qtf12erw39363|title=7 of the Top Marketing Challenges Marketers Face Today [New Data]|last=Kolowich|first=Lindsay|access-date=2017-05-16|language=en}}</ref>
* '''Function-based challenges''' When companies invest in marketing programs they look for methods that help them evaluate and track how it works and to measure [[Return on investment|ROI]]. Systems to manage their programs, maximize results and optimize spends are all that companies keep looking for.<ref>{{Cite web|url=https://www.ama.org/publications/MarketingNews/Pages/7-big-problems-marketing.aspx|title=7 Big Problems in the Marketing Industry|website=www.ama.org|language=en-us|access-date=2017-05-16}}</ref>
* '''Function-based challenges''' When companies invest in marketing programs they look for methods that help them evaluate and track how it works and to measure [[Return on investment|ROI]]. Systems to manage their programs, maximize results and optimize spends are all that companies keep looking for.<ref>{{Cite web|url=https://www.ama.org/publications/MarketingNews/Pages/7-big-problems-marketing.aspx|title=7 Big Problems in the Marketing Industry|website=www.ama.org|language=en-us|access-date=2017-05-16}}</ref>

== What organizations need from their marketing programs ==

The intended outcome of marketing investments may be

* [[Customer acquisition management|Drive acquisition]]
* Influence [[Conversion rate|conversion]]
* Produce revenues – directly or indirectly
* [[Cross-selling|Cross-sell]], [[Upselling|Up-sell]]
* Reduce [[Churn rate|Churn]]

The actual outcomes, however, happen to be

* Traffic to website
* Conversations on social media
* Views of online videos
* Calls to 1800 numbers
* Walk-ins to physical outlets

== Benefits ==

* Takes customer view of all marketing programs and integrates them to deliver value.
* Brings [[Marketing accountability|accountability]] to marketing programs.
* Helps map marketing goals to business goals.
* Helps identify the right marketing channel and tool mix.
* Small interventions in marketing programs to create significant change.


== Features ==
== Features ==


⚫
* Grow value<ref>{{Cite web|url=http://www.mckinsey.com/~/media/mckinsey%20offices/spain/pdfs/driving_intelligent_growth.ashx|title=Driving Intelligent Growth with Customer Value Maximization|last=Anna|first=Fiorentino|date=December 2010|website=|archive-url=|archive-date=|dead-url=|access-date=|archiveurl = https://web.archive.org/web/20150219200751/http://www.mckinsey.com/~/media/mckinsey%20offices/spain/pdfs/driving_intelligent_growth.ashx|archivedate = 19 February 2015}}</ref>
* X-ray marketing programs.
* Evaluate their effectiveness.
* Re-architect them according to goals.
* Augment Measurement System.
⚫
* Grow value<ref>{{Cite web|url=http://www.mckinsey.com/~/media/mckinsey%20offices/spain/pdfs/driving_intelligent_growth.ashx|title=Driving Intelligent Growth with Customer Value Maximization|last=Anna|first=Fiorentino|date=December 2010|website=|archive-url=|archive-date=|dead-url=|access-date=}}</ref>

== When this becomes critical ==

* Whenever the marketing team needs to demonstrate the accountability of spends or measurability of returns.{{Citation needed|date=October 2017}}
* Increase yield from current customer-facing programs, channels or product lines.{{Citation needed|date=October 2017}}
* Align and optimize [[customer engagement]] on [[digital media|digital]], 1-1 and [[social media]] to overarching brand and business objectives.{{Citation needed|date=October 2017}}

== Versus CRM ==

[[Customer relationship management]] facilitates deepening of relationships with existing customers using database marketing techniques. Customer value maximization, on the other hand, is used to maximize value for both existing and prospective customers and follows a multi-disciplinary approach. Customer value maximization may or may not require [[relationship marketing]].{{Citation needed|date=October 2017}}


==See also==
==See also==

Revision as of 14:37, 17 May 2019

Customer value maximization (CVM) is a real-time service model that, proponents say, goes beyond basic customer relationship management (CRM) capabilities, identifying and capturing maximum potential from prospects and existing customers.[1]

Customer-centricity

The CVM framework evaluates current methods and effectiveness, makes changes where required, and sets up a measurement system that helps in evaluating effectiveness. The CVM framework operates as a continuous process in a closed loop.[2]

Marketing scenario

Today customers own the on and off switches to all media/mediums, are more knowledgeable about various products and services they are being marketed to and have very limited attention spans owing to existing clutter. The remote, so to speak, is now unmistakably in the customers' hands. Most marketers have realized that traditional methods of marketing simply don’t work in this new milieu. They are today actively seeking, investing and mastering newer methods and tools that go beyond making their brands merely visible to ones that allow better consumer understanding, precise targeting, customized offering and above all that which engage and let them have a two-way conversation with their customers. For the progressive marketer, the real challenge begins from this stage.[3]

Marketing challenges

Marketing challenges can be predominantly dissected into 4 categories:

  • Lifecycle challenges include driving usage of a product/service, new client acquisition, enabling cross-sell, up-sell, client retention, activation, usage, preventing churn etc.[4]
  • Segment-based challenges Companies have the need to reach out to each customer in a different way suiting their needs and this is all the more the case when the company has multiple products/product variants. They need to reach out in a focused manner to independent segments that require varying strategies.[5]
  • Channel-based challenges Most companies adopt a multi-channel strategy in order to take their products or services to their customers. Each channel- be it a store, online, mobile etc. needs to be tackled in a different way to ensure maximization of results. In addition to this channel, cannibalization should also not happen.[6]
  • Function-based challenges When companies invest in marketing programs they look for methods that help them evaluate and track how it works and to measure ROI. Systems to manage their programs, maximize results and optimize spends are all that companies keep looking for.[7]

Features

See also

References

  1. ^ Superior customer value/ Buch. CRC. 2012. ISBN 9781439861288. OCLC 799019107.
  2. ^ Art., Weinstein,; Art., Weinstein, (2004). Superior customer value in the new economy concepts and cases. CRC Press. ISBN 0203501497. OCLC 300310255.{{cite book}}: CS1 maint: extra punctuation (link) CS1 maint: multiple names: authors list (link)
  3. ^ "Financial Marketers Not Ready For The Future". The Financial Brand. 2017-04-24. Retrieved 2017-05-16.
  4. ^ "Exploit the Product Life Cycle". Harvard Business Review. Retrieved 2017-05-16.
  5. ^ "Market Segmentation in B2B Markets | B2B Segmentation". B2B International. Retrieved 2017-05-16.
  6. ^ Kolowich, Lindsay. "7 of the Top Marketing Challenges Marketers Face Today [New Data]". Retrieved 2017-05-16.
  7. ^ "7 Big Problems in the Marketing Industry". www.ama.org. Retrieved 2017-05-16.
  8. ^ Anna, Fiorentino (December 2010). "Driving Intelligent Growth with Customer Value Maximization". Archived from the original on 19 February 2015. {{cite web}}: Cite has empty unknown parameter: |dead-url= (help)
Retrieved from "https://en.wikipedia.org/w/index.php?title=Customer_value_maximization&oldid=897510035"