Customer Value Management (CVM) is the overall term for a wide range of activities. CVM covers subjects such as: customer profitability, customer segmentation, marketing strategy and operational excellence. But where is the real power of CVM? What is really involved in ‘managing customer value’?
Customer Value Management is about implementing and managing one integral customer value process within the various parts of the organisation (Marketing, Sales, Service, Production and Distribution). CVM concentrates on the specific value of the customer. On the basis of that value, action is undertaken to reach a better operating result.
CVM in parts
Customer Value Management represents a fully completed process. However, CVM
can also be carried out using a step-by-step approach. Its success is in the linking
together of the various parts of the business to the same ‘value information’.
This means that CVM must be carried out based upon a company-wide vision. CVM
therefore should be a permanent part of the budgeting and reporting cycle.
Customer Value Management should not be considered as a project or a one-off
activity. It sets up the process surrounding the customer value - a process that
has to be maintained.
The CVM approach of Capgemini is split into a number of parts: Customer Value Analysis, Market and Customer Segmentation, Marketing, Sales and Service and Operations. We explain the various parts below.
Customer Value Analysis
Customer Value Analysis is an analysis that furnishes insight into the current
and future profit contribution of products and customers. Determining this profit
contribution represents a challenge. Accurately attributing the costs per product
and per customer forms the basis of the entire CVM process and is a core competence
of Capgemini.
The Activity Based Costing approach takes a number of important points of focus into account, including the clarification of customer-specific costs (‘cost to serve’). The approach makes transparent the spending behaviour of the company and the influence that customers exert on this.
Market and Customer Segmentation
The information on the profit contribution is linked with other customer information
in order to differentiate relevant markets or customer segments on the basis of
this. Subsequently, norms and criteria are set for these customer segments in
relation to the desired profitability. Based on a comparison between the actual
profitability and the normalised profitability, financial insight is obtained
into the improvement potential of the profitability per market, per customer segment
and per customer.
Marketing, Sales and Service
Based on the first two parts in the CVM approach, the customer value programmes
can be carried out per section (MS&S and Operations). Examples to bear in
mind here are loyalty programmes as a means of retaining valuable customers, or
a better optimisation of customer value for cross-selling and up-selling. Another
example is campaign and promotion management. Target group selections are made
with more accuracy, and risky groups can be avoided.
Operations
The costs of supplying products can vary per customer. Making these customer-specific
distribution and perhaps manufacturing costs transparent is an important part
of CVM. A cost analysis usually leads to a redefinition and standardisation of
ordering and delivery options. These options are often indicated by means of logistical
service packages. Per customer, a service package is offered that is appropriate
to the overall customer value and offers, for example, a particular ordering and
delivery method, speed of delivery or specific logistical elements within the
conditions.
What can Capgemini do for you?
Capgemini can assist you with the implementation of the CVM philosophy within
your organisation. We have in-house experts on the various components in the areas
of Financial Services, Logistics and Customer (Intelligence).
Our service provision ranges from a one-off scan of the present customer situation, assistance with specific parts (application of the ABC system, customer intelligence) through to the total organisation of CVM within your organisation.
Capgemini also has an Advanced Analysis Centre (AAC) at its disposal, where advanced data analyses are performed in house or on site in co-operation with Consulting Services.
Capgemini Nederland B.V.
P.O. Box 2575
3500 GN Utrecht
The Netherlands
Tel.: +31 (0)30 689 3882
E-mail: edwin.vande.sande@capgemini.com