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Measuring and Managing Your Customer Value


Louie Pitlo


September 14, 2018

With the emergence of global competitive markets has come to an emphasis on providing value to customers. Customer value delivery, in its broadest sense, is becoming a part of the vision statement of many organisations. No longer is it adequate for firms to focus on just product or services, but managers must attend to all forms of customer contact as varied as on-time delivery to accurate billing. Obviously, the marketing function must play a key role in helping a firm understand its customers and translate their needs into action-oriented information to all business functions.

It is clear that customer value management is a critical starting point for any marketing effort of any firm. The firm's effective use of data mining technology can enable the firm to have a more thorough understanding of the value that customers place on products and services. Managing for customer value exists in an organisation when it is being managed for the competitive provision of value for customers. At the same time, an effective customer information system (as this reflection would like to refer data mining to) is critical in designing a product or service concept that would deliver the expected customer value. Management could perceive market needs and customer expectations inaccurately or make poor use of information in defining the service concept. How good is the information on the customer? How complete is it? How well has the information been analysed, interpreted, and assessed by the product designers? Information regarding the market needs to be disseminated and shared among individuals who are responsible for the service design. Is the information current, and is there an adequate indication of how these expectations are likely to change in the near and long-term future? Corresponding changes in product design should be prompt and responsive.

Linking the product or service concept to the needs/expectations of the customer is dependent on how well information has been obtained on customer expectations and how well they have been utilised in the product or service concept. The value and validity of the information for product or service design depend on whose expectations are obtained and used in developing the product concept. To assure success, the marketing function must personally engage in improving strategic systems to enhance their competitiveness in customer value. Overemphasis on short-term efficiency and productivity can torpedo improvement initiatives. Managers cannot just watch the bottom line. Neither can managers delegate responsibility for competitive improvement by initiating programs and projects and retreating from involvement. Plant and corporate managers must personally engage in improving all the systems that impact and determine strategic outcomes.

As companies explore new ways to manage, emphasising a long-run commitment to being customer-driven, marketing will have to reexamine its role. Building on its customer value management expertise for understanding market dynamics, marketing must become a partner with other functions in developing an organization-wide approach to managing value-oriented relationships with customers. This role for marketing is likely to be considerably more comprehensive, integrative, and complex than its traditional role.

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