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Customer value maximization

Customer value maximization (CVM) is a real-time service model that, proponents say, goes beyond basic customer relationship management (CRM) capabilities, identifying and capturing maximum potential from prospective and existing customers.[1] Customer value maximization is about:

1. Understanding Customer Needs

  • Customer Segmentation: Divide your customers into segments based on their behaviors, needs, and preferences. This allows for targeted marketing and personalized experiences.
  • Customer Feedback: Regularly collect feedback through surveys, reviews, and direct communication to understand customer needs and expectations.

2. Enhancing Customer Experience

  • Personalization: Use data and insights to tailor products, services, and communications to individual customer preferences.
  • Customer Service: Provide exceptional customer service across all touchpoints. Quick response times, knowledgeable staff, and problem-solving capabilities are crucial.
  • User Experience (UX): Ensure that your website, mobile app, and other digital interfaces are user-friendly, intuitive, and efficient.

3. Optimizing Customer Retention

  • Loyalty Programs: Implement loyalty programs that reward repeat customers with discounts, special offers, or exclusive access.
  • Customer Engagement: Regularly engage with customers through newsletters, social media, and personalized communications.
  • Retention Campaigns: Develop campaigns targeting at-risk customers with special offers or incentives to encourage them to stay.

4. Driving Repeat Business

  • Upselling and Cross-selling: Encourage customers to purchase related or higher-end products through strategic upselling and cross-selling techniques.
  • Subscription Models: Implement subscription-based services to ensure consistent revenue and ongoing customer engagement.
  • Product Recommendations: Use data analytics to provide personalized product recommendations based on past purchases and browsing behavior.

5. Analyzing and Improving

  • Customer Lifetime Value (CLV): Calculate the CLV to understand the long-term value of each customer segment and tailor strategies accordingly.
  • Data Analysis: Regularly analyze customer data to identify trends, preferences, and areas for improvement.
  • Continuous Improvement: Use insights from data analysis and customer feedback to continuously refine and enhance your products, services, and customer experience.

Key Metrics to Track

  • Customer Satisfaction (CSAT): Measures how satisfied customers are with your products or services.
  • Net Promoter Score (NPS): Gauges customer loyalty by asking how likely they are to recommend your business to others.
  • Customer Retention Rate: Indicates the percentage of customers who continue to do business with you over a specific period.
  • Churn Rate: Measures the rate at which customers stop doing business with you.
  • Customer Lifetime Value (CLV): Estimates the total value a customer brings to your business over their lifetime.

Customer-centricity

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The CVM framework evaluates current methods and effectiveness, makes changes where required, and sets up a measurement system that helps in evaluating effectiveness. The CVM framework operates as a continuous process in a closed loop.[2]

The CVM framework is closely related to the idea of customer-lifetime-value.

One of the strategies to maximize the value that each customer generates is to split customers into defined segments, a process called client segmentation.

Marketing challenges

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Marketing challenges can be predominantly dissected into four categories:

  • Lifecycle challenges include driving usage of a product/service, new client acquisition, enabling cross-sell, up-sell, client retention, activation, usage, churn prevention, etc.[3]
  • Segment-based challenges Companies will reach out to each customer in a different way to suit their needs, especially when the company has multiple products/product variants. They need to reach out in a focused manner to independent segments that require varying strategies.[4]
  • Channel-based challenges Most companies adopt a multi-channel strategy in order to take their products or services to their customers. Each channel (store, online, mobile, etc.) needs to be tackled differently to ensure maximization of results. Companies need to take into account the costs of channel-based challenges. The increasing number of touch-points that each customer faces, has led marketers to grow increasingly reliant on machine-learning and AI models when calculating CVM models.[5]
  • Function-based challenges When companies invest in marketing programs, they look for methods that help them evaluate and track how they work and measure ROI. Systems to manage their programs, maximize results and optimize spends are all that companies keep looking for.[6]

Features

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  • Growth in value[7]

See also

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References

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  1. ^ Superior customer value/ Buch. CRC. 2012. ISBN 9781439861288. OCLC 799019107.
  2. ^ Art., Weinstein; Art., Weinstein (2004). Superior customer value in the new economy concepts and cases. CRC Press. ISBN 0203501497. OCLC 300310255.
  3. ^ "Exploit the Product Life Cycle". Harvard Business Review. Retrieved 2017-05-16.
  4. ^ "Market Segmentation in B2B Markets | B2B Segmentation". B2B International. Retrieved 2017-05-16.
  5. ^ "Four Essential Analyses for a Successful FMCG Brand Online Performance". ciValue. 2020-12-17. Retrieved 2021-03-15.
  6. ^ "7 Big Problems in the Marketing Industry". www.ama.org. April 2016. Retrieved 2017-05-16.
  7. ^ Anna, Fiorentino (December 2010). "Driving Intelligent Growth with Customer Value Maximization". Archived from the original on 19 February 2015.


 

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