Abstract
Rapidly changing market conditions and intensifying competition may also have a negative impact on the customer relationship in terms of a more volatile and less loyal customer behavior. Therefore, a detailed analysis of the current status of the customer relationship is required.
Firstly, a framework to structure different perspectives to understand the relationship between a company and its customers is presented. In addition to the process of delivering the right benefits or value to the customers (“value creation”) managers are increasingly challenged to prove that the measures they take generate a significant Return on Invest. From a financial perspective the customer benefits have to be capitalized into corporate value (“value appropriation”).
Secondly, a segmentation approach is shown, which integrates the key measures of customer relationship management: (a) Value generation from the customer perspective (“value to the customer”) and (b) value generation from the company’s perspective (“value of the customer”). To determine the value to the customer a deep understanding of the needs and preferences of the customers is required. In a further step the key drivers for the purchase decision have to be identified. The measurement of the value of the customer incorporates all relevant information concerning the revenue stream and specific costs of a single customer.
Thirdly, by segmenting customers based on both perceived value and profitability it is explored whether and for which segments the process of value creation can be deployed in the marketplace (“value appropriation”). The practical application of the “Value-to-Value”-segmentation (V2V) approach is illustrated by project examples covering both, B2B as well as B2C markets. Here, the consequences of a higher complexity and uncertainty as well as measures to stabilize the customer loyalty and revenue streams are discussed.
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Notes
- 1.
Depending on your perspective and analyzed industry, a longer forecast period can be selected. Thus, the observation of a CLV-20-year period, for example in the automotive industry is not uncommon (Gordon 2013).
- 2.
An illustrative example for maximizing the “valume of the customes” is the launch of the Apple II in 1997. While Steve Wozniak was aiming to cover the cost of materials with the sales price and therefore proposed a rather low price level, Steve Jobs had a clear profit target. The retail price was set to $666, about three times more than the production costs (Isaacson 2011).
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Burgartz, T., Krämer, A. (2016). Measures to Understand and Control Customer Relationship and Loyalty. In: Mack, O., Khare, A., Krämer, A., Burgartz, T. (eds) Managing in a VUCA World. Springer, Cham. https://doi.org/10.1007/978-3-319-16889-0_6
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DOI: https://doi.org/10.1007/978-3-319-16889-0_6
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