Customer value

Prof (dr) s p singh

 CUSTOMER VALUE is his perception of what outcome he expects from the product offering in order to achieve a desired goal. VALUE --is customer defined --depends upon outcome he/she seeks from a offering --is opaque is contextual to end user,to end use situation and environment.

 is multidimensional is trade off between total benefits and total costs Is relative to alternatives,known as BASE I.E Best available substitute or Equivalent) BASE can be competitors offering --your own offerings if selling upgrades or new versions --not buying at all i.e. no risk taking by the customer. Value may be even mindset of the customer(s).

TYPES OF CUSTOMER VALUE

As per jagdish seth and mittal ,customer is in basically three roles USERseeks performance, social& emotional value PAYERseeks price value,financial values BUYERseeks service value,convenience & personalization values Hence a marketeer can create values accordingly for marketing strategy building.

 But we all know that value is derived basically from three angleseconomic,functional and psychological. 1.Economic value-this is the fundamental value i.e.net monetary advantage of using a product over its life time. 2.Functional valueaspects of product that provide utilitarian benefits to customers Psychological values Intangible value which a customer derives in his/her mind,since rest other values are tangible. As competition increases,psychological values becomes more important.

BARNES types of values

Barnes in 2000 gave another classification of values related to customers. 1.choice based valueschoices available for various interactions with the customers and the company. 2.Employee based valuesproviding value to customer thru its own employees i.e. care,personal selling only etc. 3.Information valueproviding more and more information to customers,educating them and keeping them involved. 4.Association value-value perception of getting associated with the brand or logo.

 5.Relationship value--Relationship marketing in play i.e. how co. has build a relation with the customers and what value is assigned to it by the customers. 6.customers unique valuepersonalization enhances the value for individual customers making them feel unique.

 7.Experience valuebased on customers human contact or interactions ,the feelings,emotions,sense of accomplishments generated. 8. Product for price valueequivalency of price paid and value realized by the customer. 9.Access or convenience valuebased on approachability, convenience of purchase or delivery perceived by the customers 10. Co-creation by involvementwhere a customer is involved in co creation of values of a product, he attaches more value.

Customer life time value

CLTV means lifetime value of the customer relations during the period of relations between a customer and company. It depicts the amount a single customer will bring to a companys profits over the course of customers life. It represents how much each customer is worth in monetary terms .

 It is very difficult to make accurate calculations of CLTV. But calculating it shall help us understanding 1.how much it costs to acquire a customer, 2.which customer segments to target 3.what is the return on investments 4.how much to spend on customer retention,& 5.what is the single customer profitability

 A simplest formula to get CLTV could be Margins x sales-cost of acquisition+savings from referrals x correction factor Note correction factor may be 2% i.e. 1.02 or may be even 20% i.e.1.20. However ,it can not be said that above shall help us get an exact CLTV. Several ways/formulas are in vogue and it shall depend upon the kind of product, kind of customers, sales pattern and various other factors of the business environment to adopt a formulae.

 Successor to LTVYIELD OPTIMIZATION This is based on the premise that what delivers the most return for the least investments Answer is simplewhich ever yields the largest revenue for the least outgoings.hence,the best method for finding out LTV is to find out costs across the board and establish a low cost structure in long run to maximize the customer life time value.

Customer value management

The CRMS main aim is to deliver a better value to customers as compared to strongest competitor in each targeted market. CVM provides a systemic approach of modeling a value proposition by a company

Following management steps are there in CVM 1.VALUE BASED SEGMENTATION OF CUSTOMERS 2.VALUE PROPOSITION DEVELOPMENT 3.BUSINESS OPERATIONS METRICS 5.INTEGRATED CHANNEL STRATEGY 6.CUSTOMER SERVICE STRATEGY 7.EXPANDING CUSTOMER RELATIONSHIP 8.MIGRATING CUSTOMERS TO NEW CHANNELS/SEGMENTS

 The CVM has ushered in an era of data driven decision making instead of opinion driven methodologies. It has brought increased responsiveness to customer needs & customer valuation And, it has brought in increased accountability in organizational functions.