The use of data is becoming increasingly accessible. And that creates new opportunities. For example, you can easily tie different data together to gain new insights into your customers. Customer value management (CVM) helps your company gain insight into the value chain. This allows you to formulate concrete actions to increase the value of the services and products for your customers. This gives you opportunities to increase returns and strengthen your competitive position.
Customer Value Management - Greater insight into returns, costs and revenues at a glance
The challenge
To understand the value chain, it is important to properly link both costs and revenues. A popular method of allocating costs to activities isactivity-based costing. However, in practice, it proves difficult to allocate all costs to specific products or services, let alone link them to the customer. In addition, a fragmented IT landscape and outdated IT solutions within companies create a serious challenge.
Customer Value Management as a Solution
Fortunately, Customer Value Management (CVM) offers a solution to this challenge. CVM is an integrated approach to bring together different types of data from different domains. CVM uses smart tools and different types of data to get the real facts and then monitor them. CVM gives you answers to concrete questions such as:
- Are all relevant costs included in costing?
- How can I improve the profitability of my products?
- How do I ensure margins grow on my products?
- Which customer delivers the most?
- What sales channels do I deploy?
- What does our service cost?
- How do I get a handle on my transportation costs?
- How much return do I expect?
Benefits of CVM
In addition to answering the questions listed above, CVM provides you with insights into a variety of areas that are valuable in the quest for profitability. Through an integrated approach, CVM is broadly applicable and can be used for:
1. Entering new markets
With insights into your customers, organizations can discover new markets. In addition, the data-driven insights offer new strategies to enter profitable markets. This allows you to better reach these new markets immediately.
2. Measuring the performance of products and services.
Combining and enriching data from different corners of the organization creates new insights that say a lot about the value chain. Linking all costs and revenues together creates reliable and up-to-date insights into the performance of your products.
3. Developing new propositions.
In addition to insight into costs and revenues, Customer Value Management offers even more insights. For example, insight into customer relationships and purchasing behavior. This provides focus on all aspects of customer and product.
4. Optimize marketing strategies.
Knowing who your customer is and how best to reach them is essential to an effective marketing strategy. This way, the right products can be offered through the right sales channel. In doing so, you avoid wasting the marketing budget on reaching an audience that is not attracted to your products anyway.
5. Offer valuable products
By getting a better understanding of the customer and understanding their needs, you as an organization can learn to better match your product offering to your customer's needs. The sooner you have these insights, the sooner you can get started on those products that really work.
6. Innovate
In addition to fine-tuning your product offerings, you can also develop new products that are even better suited to the wants and needs of your customers.
With Customer Value Management to insight?
The first step is to build a team with professionals who have various types of knowledge at their fingertips, in order to get Customer Value Management right for your organization. The second step revolves around the tooling. To quickly distill insights from large amounts of data, you need powerful tools. There are a number of specific tools that can help you specifically process the necessary CVM data. Consider SAP PaPM and Tibco data virtualization, for example, which we see great results with in practice.
The analysis itself begins by mapping the available information, and the relationships in that information. Next, you look at how long someone has been a customer and what behaviors a customer exhibits. With a good picture of your customer relationships, you can start looking at logical customer groups, total revenues and costs per group. This will reveal the true margins per customer group. With all these insights, you can better manage and invest as a company in customer groups that actually provide returns.
Finext as a partner in the implementation of CVM
The specific interpretation of CVM varies from company to company. However, the essence remains the same: providing insight into costs and revenues and relating these to the clients. Finext helps with this labor-intensive project by working with you to see if you are doing things right and if you are doing the right things.
Finext supports companies to make real strides. We do this by linking data together to build effective, reliable and unambiguous insights. Since 2007 we have completed successful projects for ING Retail, NS, PostNL, Nationale Nederlanden, Rabobank and many others.
Getting started with Customer Value Management and customer profitability?
In our webinar "the 7 steps to understanding customer profitability," we'll take you through our roadmap to understanding your customers' profitability. And we discuss the 7 steps to gain insights that will help your organization make the right strategic decisions. Watch the webinar directly via this link!
