Two faces of customer value

Two sides of the same coin: the value of the customer and the value for the customer. A customer-oriented organization competes on value, not on price. Find the relationship with customers who can represent a certain value for the organization and offer them added value.

When determining value propositions for your customers, it is about managing your investments in customer relationships. Which customers offer you which value, with which distinctive focus and with which underlying earning model? How do you develop and optimize the value of the customer for the organization? The ultimate change from product to customer-focus occurs when you focus on managing your customer portfolio, not your portfolio of activities or products.

The customer as 'most valuable asset'

The most obvious goal for determining the value of an individual customer is the investment decision. Is it worth investing in this customer? What are the future revenues that the customer will generate? In practice, not all customers appear to be profitable. For some customers, the costs to serve them exceed the expected benefits. In that case, there are only two options: adjust the operating concept (lower interaction costs and/or improve transaction value) or award the customer to another market party.

Fortunately, customer value is not static. The organization can influence the value of individual customers. By offering them a lot, customers can limit their expenses to competitors in favour of your organization, which results in a higher customer share. In addition, based on solid knowledge of your customer, you can make targeted offers for other or more expensive products; cross- and up-selling. This also increases the customer value. The organization can expect to generate more income from this customer in the future.

If we manage the customer base depending on the value of the customer for the organization, we have to calculate two types of Customer Lifetime Value (CLV). The current customer value. This is calculated on the basis of the current data from the customer and answers the question: how much is the customer worth at this moment? And the influence on the value of an individual customer, if specific activities are undertaken. This can provide an answer to the question: how much could the potential customer value be when the purchasing behaviour develops optimally?

For Topline growth is customer value development; the right attention to the right customers, essential. Feel free to contact us for an exploratory conversation. You can call 020 2060830 and ask for Ruud van der Splinter.