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The Development of Value-Driven Firms

The Development of Value-Driven Firms

The values of an organization are just as important as the products they sell; having a strong value driven culture is important.

LEARNING OBJECTIVES

Demonstrate how information guides companies to develop value driven marketing plans and approaches

KEY TAKEAWAYS

Key Points

  • For a long time, the sole purpose of a company, it was thought, is to make profits –at least in the minds of CEO’s who normally focus on short term returns. This was the precursor to customer value management.
  • Becoming a value driven firm involves aligning every function to the customer, discussions with key officers, and assigning customer roles.
  • Becoming a value driven firm involves the training and certification of front line people to provide excellent customer service and value to a customers buying experience.

Key Terms

  • Total Customer Value Management: Total Customer Value Management represents migration from product orientation to customer orientation. This required implementing a customer focused vision that meant a major shift in companies’ strategic thinking, often including radical move from product or price as the basis for competition to process or service value, resulting in the concept Total Customer Value Management (CVM)
  • customer value mapping: A method of measuring how you are doing in general and how you are doing in comparison to your competitors by matching the cost of your product with the benefits your customers receive for it.

Having a strong value driven culture will ensure continuous high performance within an organization. The values of an organization are just as important as the products the organization sells.

For a long time, the sole purpose of a company, it was thought, is to make profits, at least in the minds of CEOs who normally focus on short term returns. This was the precursor to customer value management, which has been practiced for the last 35 years, being incorporated into corporate thinking. Some people focus on customer service, others on customer experience, others on lifetime value for a customer; many companies believe that having a customer service department is all it takes to create customer value.

picture of a bust of socrates

Importance of Values: Socrates was an influential Greek philosopher who studied ethical behavior.

This is not true. A new practice called Total Customer Value Management (CVM) involves a total focus upon the customer.

Total customer value management requires:

  • Aligning every function to the customer, discussions with key officers, and assigning customer roles
  • Incorporating Customer Circles and propagating them. These will align the front line people and make them customer focused
  • Assessing unnecessary and irrelevant tasks from a customer viewpoint
  • Training and certification of front line people. This includes training shop employees, such as the one shown here.
  • Listening to Voice of Employee, Voice of Customer, and Voice of Competitor. Voice of Employee will be captured through the Customer Circles and Employee Value Add, and the Voice of Customer and Voice of Competitor will be captured by Customer Value Added (CVA).

Becoming customer centered with CVM starts by identifying the target customers and securing their vision of the ideal outcomes from doing business with the company. This includes:

1. Customer relations

  • Customer Portfolio Analysis
  • Customer Intimacy
  • Value Proposition
  • Managing the relationship

2. Customer value mapping

  • Identifying what you need to know about the market you’re competing in. Your knowledge includes: customer demographics, the importance of perceived costs and benefits to your customers, and how well you’re doing in these areas compared to the competition.
  • Conducting research to uncover the information you need.