Overview — Customer Value Management

Customer Value Management strives to achieve the twin goals of imparting superior value to target customers, and getting an equitable return on the value delivered. To achieve these goals, suppliers must be able to persuasively demonstrate the value of their product offerings relative to competitive alternatives.

Customer value management projects are commissioned to address business issues or opportunities. Teams working on these projects, which may last a number of months, convene over a series of two to three-day workshops, where they brainstorm and chalk out action plans.

Market intelligence is of vital importance. Teams rely on internal experts as well research methods such as the Kano analysis, to determine the value elements or product attributes that they need to focus on. A value assessment is required to ascertain costs and benefits of these value elements.

Central to the exercise is the construction of an empirical value model based on VIU analysis. The model would generate the VIU and VIU price of the supplier’s offering, relative to competing market offerings. It forms the basis for building the business case for change.

Customer buy-in at various stages is crucial to the success of these projects. The cooperation of a few key suppliers helps greatly during value assessment. Particularly in the context of VIU research, the expertise of customers helps greatly in value stream mapping and activity-based costing.

To secure customer buy-in, the business case must be credible, and the opportunities identified must resonate with customers. Estimates and assumptions must be realistic/conservative and all elements of significance must be included in the analysis.

Suppliers should craft customer value propositions that mirror the purchasing orientation of targeted market segments. To resonate with these segments, the customer value propositions should highlight the key points-of-difference that deliver the greatest value to these customers.

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