Customer value management (CVM) is the process of creating and delivering value to customers in a way that generates loyalty and satisfaction. It is a customer-centric approach that involves understanding the needs and preferences of customers and developing products and services that meet those needs.
In the banking industry, CVM marketing becoming increasingly important. Banks are no longer just places to store money; they are now expected to provide a range of financial products and services that meet the changing needs of customers. As a result, banks are focusing more on customer-centric strategies that emphasize the importance of customer value management.
CVM marketing involves understanding the customer’s lifetime value and identifying the most profitable customers. This helps banks to tailor their products and services to meet the needs of their most valuable customers and to develop strategies to retain these customers over the long term. By focusing on customer value management, banks can increase customer satisfaction and loyalty, reduce churn rates, and ultimately increase revenue and profitability.
The importance of customer value management cannot be overstated. It is a customer-centric approach that helps businesses to understand their customers’ needs and preferences, develop products and services that meet those needs, and ultimately build long-term relationships with customers. In the banking industry, CVM marketing is essential for ensuring that banks can meet the changing needs of customers and stay competitive in a rapidly evolving market.
Customer Value: How to Calculate and Increase the Indicator
We live in an interesting time when many of the old dogmas that have determined approaches to doing business for decades and even centuries are collapsing. The classic approach to building an efficient business was based on the concept of value added. In accordance with it, enterprises primarily developed those areas of their work, the stages of production of products or the provision of services, at which a significant part of this added value was formed. However, in the last two or three decades, changes have taken place that have brought to life a very paradoxical, at first glance, idea.
Customer value is an indicator that allows you to determine how much you can spend on attracting customers so as not to work at a loss. It is clear that without this information, it is difficult to conduct business. On the other hand, this coefficient is not constant and is able to increase or decrease depending on various factors. Therefore, it must be calculated systematically, as well as regularly taking measures to increase the indicator.
The value of the product that you offer to the customer is the potential value that he can receive as a result of using your product in his business. Thus, the client buys the potential value. Your product is assimilated by the client’s Value Chain, used in the production process of the client’s product, and minus all costs (tangible and intangible) in the bottom line, becomes the client’s net benefit.
Among the main benefits to get with customer value management are the following:
- Increasing the customer base, customer loyalty, and sales volumes.
- Reducing the cost of implementing marketing activities and increasing their effectiveness.
- Increasing the company’s competitiveness in the market.
What Is Understood Under Customer Value in Marketing and Its Examples?
Customer value in marketing is an expression of what is new in modern business strategy. In the industrial age, product innovation and production management dominated. Innovation provided a continuous stream of new products that guaranteed growth and market share. Production management provided cost and quality management. Customer management went to sales departments.
Customer value management can be viewed as marketing, which is a way to win digital information and communication technologies to address the distribution of marketing communications to the target audience and the implementation of marketing activities in virtual and real environments.
Examples of customer value management include the following:
- Price.
- Quality.
- Monetary.
- Time.
- Energy.
- Emotional costs that consumers consider when evaluating the value of a purchase.
- What the product or service can do for that particular person.
Additionally, customer value is the unique characteristics of the product (monetary, functional, emotional), the benefits that the company provides to its customers, and which provide it with a unique advantage over competitors. Thanks to this advantage, consumers make their choice in favor of the company’s products.