Customer Value Management (CVM) is a process used to assess and improve the value of their products and services to customers. It involves understanding what customers want and need and creating a plan to deliver that value.
CVM is essential for businesses because it allows them to focus on creating valuable products and services for their customers. This, in turn, can help companies to increase sales, improve customer loyalty, and attract new customers.
There are several steps involved in CVM:
- Understand what customers want and need. This can be done through market research, surveys, and interviews.
- Create a plan to deliver that value. This plan should include a strategy for how the business will meet the needs of its customers, as well as a budget and timeline.
- Put the plan into action and track its effectiveness.
- Make changes to the plan as needed.
CVM is a continuous process that should be revisited regularly. Businesses can improve their customer value proposition by regularly surveying customers, conducting customer research, and tracking customer feedback.
Constructing a Value Ladder is critical to any business, especially regarding marketing and sales. It provides a visual of how your products and services flow in relation to each other and the value they provide to customers. Creating a value ladder is a process of determining the relative value of your products and services.
This begins with understanding your customer’s problem and mapping out how your product or service can uniquely address it. Once you understand the problem, you can create a step-by-step process of how your product or service can provide the most value and address the customer’s problem. For example, if you are selling a product that helps people save money, your value ladder might look something like this:
Problem: People need to save money
Solution: Product that helps people save money
Step 1: Provide a solution to help people budget their money
Step 2: Show people how to save money on their everyday purchases
Step 3: Offer ways to make money through investing and saving
Step 4: Help people use their money to achieve their long-term financial goals
The value ladder helps to illustrate how your product or service can provide value and help customers solve their problems. It also acts as a map for your marketing and sales efforts, outlining the steps you need to take to reach your target customers.
Value Modeling is a tool that can be used to help build a value ladder. It is a more in-depth tool that quantifies the value of your product or service by breaking it down into specific components.
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- Identify the different value propositions of your product or service and how they compare to the competition.
- Outlines the cost of providing each value proposition and the potential revenue it could generate.
- Help decide pricing, marketing, and sales strategies.
- Track the performance of your product or service and see how it changes over time.
Conclusion
Managing customer value is important for all businesses, as it helps create and keep satisfied customers. By understanding what customers want and need and providing excellent customer service, companies can ensure that customers keep returning and recommending their services to others. The value ladder and value model are essential tools for any business. They can help you understand the value of your product or service and how to best market and sell it to customers.
I am starting to read Managing Customer Value: One Step at a Time (Amazon affiliate link: https://amzn.to/3xF0Nwa). After reviewing the introduction, I decided to post my current thoughts about the three components the authors discuss. I am going to elaborate on each of these in more detail before I start reading the book.