Why Investing in Customer Value Management Pays Long-Term Dividends
Through creating useful metrics and utilizing automation, customer value management (CVM) is revolutionizing business and the world as a whole.
Customer value management is the optimization of a business's customer base, expanding on customer relationship management (CRM). Customer relationship management explores how businesses manage current and potential customer interactions, focusing on establishing long-term customer relationships and emphasizing satisfaction. By contrast, customer value management focuses on specific aspects of the business-customer relationship, like trust and commitment. Customer value management is typically data-driven, allowing businesses to properly analyze customer data and increase customer value.
If businesses seek consistent long-term growth, investing in customer value management is the way to go to truly meet (or exceed) customer expectations.
Why Businesses Place Emphasis on Customer Value Management
Businesses prioritize customer value management to improve service delivery and provide benefits that go beyond money. Essentially, you’re moving your customer relationship strategy forward, going from voice to value.
Too many B2B companies derive their strategies from what their competitors do rather than understanding the unique needs of their customers, resulting in unnecessary complexities compromising customer experience (CX). With customer value management, businesses stop over- and under-evaluating customer value points, eradicate the misjudgment and adjustments that often cloud customer management strategies, and create new opportunities to establish lasting customer relationships.
Considering that 80% of revenue comes from 20% of your customers, customer value management allows businesses to significantly maximize their value by directly addressing customer pain points. Through automation and using statistical analysis, customer value management augments revenue, finding and analyzing various cross-selling opportunities while identifying plausible customer retention opportunities.
Customer Value Management Identifies With the Most Sophisticated Buyers
Customer value management is especially necessary as buyers are gradually becoming more sophisticated. Around 60% of buyers are highly educated on specific services or products before making their first engagement. Because of how the pandemic has transformed sales approaches, going from traditional to digital, customer value management allows businesses to grow sales in times when face-to-face selling isn’t as frequent.
Sales teams are directly trying the value of their offering to each of their prospective customers, meaning sellers are on the front lines explaining the business cases for their respective services. Value can either be quantitative or qualitative, showing how a customer can save money, enhance production, reduce the perceived risk, and/or improve efficiency to optimize the customer experience. Businesses simply cannot spend money without having the proper use cases to explain the true value of the products/services they provide.
How Using Metrics Optimizes Customer Value Management
Customer value summarizes the economic value of customer relationships to businesses, knowing what’s truly important to customers throughout the buying process. To make such a summary, businesses must determine the relative importance of benefits and pricing, as well as any associated attributes relative to the value that businesses provide and derive.
Relying primarily on data and analytics, customer value management reduces acquisition costs. Businesses must collect data regarding value attributes, acquisition costs, and purchase frequency, among other variables, to quantify customer value. Thanks to data management and analytics advances, businesses of all sizes can acquire such data cost-effectively, using it to accurately measure customer value. Customer data businesses should consider acquiring to measure customer value include:
- Firmographic Data - Including the name, business location, and industry
- Transaction Data - Featuring the most recent purchases, types of products purchased, and pricing information
- Interaction Data - Focusing on consumer behaviors, including channel usage and content consumption
- Financial Data - Acquisition costs, profitability data, and consumption rates
The above data can be used to determine the customers most valuable to a business and how to optimize value-based selling to positively influence customer perceived value. The data evaluates customers regarding their lifetime value, transactional value, influencer value, referral value, customer profitability, and market share contribution.
The Influence of Automation on Customer Value Management
Customer value management has evolved in recent years thanks to changing dynamics regarding buying patterns and working conditions as more teams work remotely. Automation has made customer value management more scalable and sustainable, taking out the manual number crunching with automated data entry and digitizing customer pitch decks. Sales reps have more opportunities to connect with prospective customers, scaling business value with on-demand conversations. Thanks to elements like value realization trackers, collaborative business case development, and other return on investment (ROI)-based calculators, customers are exposed to potential benefits from using services.
Thanks to automation, sales teams can leverage value on-demand, building more durable relationships after sales are closed, renewing customers/clients rather than paying exorbitant amounts to acquire new customers.
Versational provides a conversational assistant solution, leveraging automation to help your business value and ensure you properly identify how to boost customer value. Let’s help you to make your relationships with customers last by enhancing the quality of your conversations. Try our product for free today.