6_customer value management

7/31/2019 6_Customer Value Management

1/20


2/20

CUSTOMER CENTRICITY

Customer centricity is a strategy tofundamentally align a companys products

and services with the wants and needs of itsmost valuable customers to maximize profitsfor the long term.

It also refers to the orientation of acompany to the needs and behaviors of itscustomers, rather than internal drivers (suchas the quest for short term profit).8/27/2012 Dr. Vandana Khanna 2


3/20

CUSTOMER CENTRICITY

FRAMEWORK

8/27/2012 Dr. Vandana Khanna 3


4/20

THE JOURNEY TO

CUSTOMER CENTRICITY



5/20


WHY CUSTOMERS QUIT?

1%

3%

5%

9%

14%

68%

Die

Move Away

Form 'Other'Friendship

Competition

ProductDissatisfaction

IndifferenceAttitude


6/20


Customer Value Management

Quality

TimeEffortPrice

Value


7/20


Customer Value Defined

Sub-attributes

Sub-attributes

Product

Quality

Customer

Service

Marketing

Sales

Order Fulfillment

Overall

Quality

Relative Price

Competitiveness

Overall Value

Satisfaction


8/20

Customer Value Equation

erviceuiringtheSCostsofAcqice

tyocessQualioducedsultsValue

Pr

PrPrRe


9/20


Stage One Stage Two Stage Three Stage FourMinimumRequirements

Customer

Focus

Customer

AttitudesCompetitive Focus on

Targeted Markets

Conformance

Quality

Delivering what

we promise

Meeting

standards

Customer

Satisfaction

Providing what

customers want

Responding tocustomer

complaints

Customer

Loyalty

Retaining our

customers

Getting them to

recommend us

Customer

Value

Meeting critical

needs of targetedcustomers

Outperforming

competitors

Creating new,

unique benefits21st CenturyGrowth

Company

Source: Adapted from Managing Customer Value by Bradley T. Gale, (New York, The Free Press, 1994)



10/20


I cant get no (customer)satisfaction

Satisfaction in itself does not lead to customer loyalty

Positive empirical relationship between value focus and

link to market share

Where are leading-edge companies headed?

Satisfaction

=

Satisfy Existing

Customers Better

Value

=

Improve Your

Competitive Position

Attract and Retain

Targeted Customers


11/20


SatisfactionCurrentService

The EntireCustomer

Relationship

Lag Indicator Lead Indicator

CompanyPerformance

Company Vs.Competition

Tenuous Link toBusiness

Performance

ProvenRelationship to

BusinessPerformance

Value


12/20


INPUTS

Customer Value Management Council

External/Internal Data Sources

OUTPUTS

Customer Value Tools and Data

Competitive Value Proposition

Customer Loyalty and Market ShareAnalysis

KEY MEASUREMENTS

Customer Loyalty Market Share Profitability Customer Retention

DEFINITION

Customer Value Management is a process designed todevelop and execute value-based strategies which impactmarketing, strategic planning, competitive positioning,branding, pricing, and selling.


13/20


IdealCustomer

Value

ProcessCapabilities

PerformanceImprovement

CUSTOMER-CENTRIC


14/20


1. Assess Market

Opportunity

2. Conduct

Analysis

3. Commit to a

Value Proposition

4. Measure and

Reward

Performance



15/20


Value Analysis Tools

Value Scorecard

Performance Scores Weights for:

Dimension Attribute Filto

Walter

Envir

Brite

Clarion

Average

Attrib. Value

Benefits P ro du ct Chlo ro fo rm Remo va 1 0. 0 1 0. 0 2 .0 1 0. 0 2 .0 6 .8 12 .0

Lead Removal 10.0 10.0 10.0 8.0 10.0 9.6 10.0

Taste 8.0 10.0 8 .0 6.0 6 .0 7.6 9.0

Clogging 8.0 2.0 10.0 4.0 8.0 6.4 25.0

Service Reliable supply 5.0 5. 0 7.0 9.0 9. 0 7.0 16. 0

Technical spport 2.0 1.0 3.0 1.0 7.0 2.8 14.0

Relat ionshipRelat ionship 7 .0 9 .0 5 .0 5 .0 9 .0 7 .0 14.0

Weighted benefit scores 7.0 5.8 6.7 5.8 7.5 6.6 98.3

Costs Selling pric Capital cost 17 40 30 37 25 30 100.0

Oth er co sts D isp os ib le s c os t 1 20 1 60 54 8 5 1 30 1 10 1 00 .0

Weighted cost scores 137 200 84 122 155 140 -1.7

Value Map for Commercial Filtration -- Base

Envir

Walter

Filto

Brite

Clarion

60

80

100

120

140

160

180

200

220

5.6 6.0 6.4 6.8 7.2 7.6

Performance

Price

($)

High

Cost

Filto Value Relative to Average

-25.0 -20.0 -15.0 -10.0 -5.0 0.0 5.0 10.0 15.0 20.0 25.0 30.0

Chloroform Removal

Lead Removal

Taste

Clogging

Reliable supply

Technical spport

Relationship

Capital cost

Disposibles cost

Relative value impacts - Filto vs. Average

Differential worth of performance advantages and disadvantages

Dimension Attribute Filto Walter

Env

ir

Brite

Clarion

Ave

rage

Benefits Pro du ct Chloroform Removal 22 22 -34 22 -34 0

Lead Removal 2 2 2 -9 2 0

Taste 2 13 2 -8 -8 0

Clogging 23 -64 53 -35 23 0

Service Reliable supply -19 -19 0 19 19 0

Technical spport -7 -15 2 -15 34 0

Relationship Relationship 0 16 -16 -16 16 0

(a) Total differential worth of benefits 25 -44 9 -43 53 0

Costs Selling price Capital cost 13 -10 0 -7 5 0

Other costs Disposibles cost -10 -50 56 25 -20 0

(b) Total cost advantage 3 -60 56 18 -15 0

Price Performance Profile

Value Map

Head-to-Head Comparisons


16/20


IdentifyValue

Drivers

MeasureValue Creation

AfterTransaction

BusinessProcess

Improvement

ConductBaseline

Study

On-goingTransactionalSurveys

DevelopActionPlans

MeasureMarket

Perception

On-goingMarketSurveys

Feedback


17/20


The Value PropositionDeployment Process


18/20


Modeling Employee ValueThe Right

Workforce

Positive

TurnoverAcquisitionRetention

EmployeeValue

Relative

Compensation

Relative Job

Quality

BaseSalary

Work LifeBalance

BrandEquity

ManagerQuality

BenefitsBonusPayEquity


19/20


The Value of Customer Value

Strengthen value propositions valueis the basis for customer decisions

Identify responses with the greatest

impact on customers future purchasebehavior

Hone in on winning client strategies

Discipline and focusacross all

functions

Dramatic impacts and performance gains

The key to attracting,satisfying, and retainingcustomers.


20/20


Bonding With Customers

Financial Bonds volume and frequencyrewards, bundle and cross selling, and stablepricing

Social Bonds personal relationships,continuous relationships and social bonds amongcustomers

Customization Bonds customer intimacy,

mass customization and anticipation/innovation

Structural Bonds integrated informationsystems, joint investments and shared processes

and equipments

6_customer value management

Documents