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Opinion: Marketing Society - Customer value is key

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TMCnews Featured Article


May 18, 2006

Opinion: Marketing Society - Customer value is key

TMCnet News


(Marketing Via Thomson Dialog NewsEdge)Board directors the world over have developed abbreviation fatigue.

ERP, CRM, CCM, ETL and many others have conspired to turn us off, especially since the recent acceleration of invention has turned a sprinkling into a downpour.

But one new idea, customer value management, or CVM, actually marks a fundamental step forward for marketers.

Rather than being a subset of customer relationship management, CVM goes a step further. It also brings the interests of the finance director, the managing director and the marketing director into an alignment that overcomes the traditional friction between these functions.

CVM monitors and measures profit per customer and aims to improve this metric over time. It is important to the managing and finance directors that the marketing director is using this performance measure because it provides an insight not only into the amount of earnings being produced but also the efficiency with which they are generated.

Efficient profit generation is fundamental to the level of shareholder value a company creates. It is equally important that a company can continue to develop markets. Sustainable growth is crucial to most investors, who are not volatile day traders but institutional players looking to build stable investments for pension funds.

Trends in CVM provide important insight into investment, business and marketing management. I have had a sneak preview of a forthcoming report from Group 1 Software that shows some industries (such as retail) have falling profit per customer, whereas others (such as insurance) are rising.

The success of individual companies needs to be judged against the industry norm. This emerging focus on generating customer value efficiently plays to everything that is interesting about marketing.

The value of the brand needs to be sustained to avoid commoditisation, while the profitability of different customer segments helps define business and communications strategies. Loyalty and customer satisfaction, meanwhile, forge an intimate connection with the bottom line. The impact of all customer 'touchpoints' have to be controlled and co-ordinated. And staff and agencies need to be trained and incentivised to act as brand advocates.

It took a decade for CRM to be accepted at board level because it was not clear how the strategy would deliver results. CVM aligns the interests of every key member of a board of directors and investors understand its importance.






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