Struggling to stand out? Adopting a customer value management strategy can set you apart. You can become the obvious choice in a crowded field by identifying what matters most to your customers and delivering better, more nuanced solutions.
Providing value requires time and attentiveness, but it yields a richer customer experience and concrete business outcomes. Rather than customers adapting to your product, your product evolves to meet their needs.
In this ultimate guide to customer value management, see how the strategy can benefit you and your buyers, how to measure customer value, and how to implement customer value management.
What is customer value management?
Customer value management (CVM) is a business strategy that involves understanding, delivering, and enhancing the value your products or services provide to customers.
Customer value management is related to customer relationship management. While the latter focuses on customers’ interactions with a company—via social media, emails, customer support, etc.—and seeks to increase retention, customer value management focuses on providing for customers’ needs in ways that also generate returns for the company.
Why customer value management is important
Customer value management lays the groundwork for a more meaningful customer experience. Here are three areas customer value management can impact:
1. Conversion rates
Customer value management is a powerful business tool that can positively impact conversion rates. It enhances conversion rates by aligning your offerings closely with the market’s needs. Leveraging customer data for unique insights guides product and marketing teams to tailor their strategies effectively.
This approach doesn’t require constant reinvention; instead, it focuses on understanding and meeting your target audience’s specific desires and value perceptions, increasing the likelihood of converting prospects into customers.
2. Customer satisfaction
Customer satisfaction is a cornerstone of perceived value. The better a customer feels about their purchase or association with your brand, the more likely you are to secure a relative competitive advantage over other sellers in the marketplace.
Focusing on customer experience and product quality is one of the best ways to generate social proof and trust that brings potential customers to your brand.
3. Customer retention and brand loyalty
Long-term relationships with loyal customers are an invaluable source of renewals and referrals. Prioritizing customer value management means actively investing in these relationships beyond the initial purchase.
Engage existing customers in conversation whenever you can, whether through email marketing or social media campaigns, to drive value. Use your insights from engaging with customers to further refine your product offerings.
How to measure customer value
Measuring customer value is ultimately about measuring perception: how your customers perceive the worth of your offering compared to everything else out there.
Since perception is subjective and “worth” can be defined by a wide range of factors, it can be difficult to pinpoint an exact score that ranks you in the competitive marketplace. What you can do is use the customer data you do have through purchasing behavior and feedback surveys in this simple calculation:
Total customer benefits − Total customer costs = Customer value
In this formula, benefits could include product quality, value for the price paid, brand identity, customer experience, or ease of use, while costs might reflect price, maintenance, or learning curves associated with adoption.
Customer value management is oriented around increasing the benefits to outweigh the costs; if your product is expensive but worth the price because it solves a significant problem, you’ve succeeded from a place of value. This is known as relative perceived quality.
How to implement customer value management
- Understand your value proposition
- Determine how you’ll measure success
- Understand your customers
- Seek feedback for product development
Here are four key steps to implement customer value management:
1. Understand your value proposition
The first step to implementing customer value management is understanding what you bring to the competitive landscape. Through a combination of market research and branding exercises, identify how your company’s offering is uniquely positioned to add value or answer a specific need. This is your unique value proposition.
2. Determine how you’ll measure success
Once you have a strong sense of your value, outline how you’ll define customer success with specific performance metrics. This might include increased positive customer reviews, web traffic, social media engagement rate, or total revenue. Tracking actual customer outcomes will prove how your offering delivers the value you aim to provide.
3. Understand your customers
To provide the maximum value to your customers, you’ll need to understand how they define it. Customer surveys—both those sent to your existing customer base and third-party research surveys—are an invaluable source of information and insight.
Dial down into the audience demographics you find on your website and social media analytics. Then, have conversations with customers about how and why they make purchasing decisions.
4. Seek feedback for product development
Aligning your products with customer value requires a willingness to iterate depending on what’s working and what’s not. Rather than operating in a vacuum, product teams should be guided by customer feedback and use cases to improve quality, functionality, and more. Focus groups, surveys—even partnering with content creators for honest reviews of your products—can be useful ways to capture this information.
Customer value management is a collaborative, ever-evolving relationship between you and your existing customers. For B2B or SaaS companies, this might mean regular meetings with clients to check in over the contract term to ensure your solution continues to generate the desired values or desired business outcomes outlined at the start.
Customer value management FAQ
What is CRM and CVM?
Customer relationship management (CRM) takes a long view of satisfaction over customer lifetime, while customer value management (CVM) focuses on delivering explicit value over the course of a transaction. Focusing on CVM will get customers in the door and keep them happy, while a well-organized and detailed customer relationship management system helps you keep track of each stage of the customer journey.
How do you increase customer value?
By reframing your offering, outreach, and discovery around the specific results or outcomes you can achieve for your customers, the higher your rate of perceived value becomes. Investing in the customer experience—and how well you market to those customers—is the best way to increase customer value.
How do you manage customer value?
While much of customer value centers around perception—whether that’s brand perception, product perception, or overall value—managing it is about conversations. To fully understand a customer’s pain points and best serve those challenges, you must be willing to ask the right questions and listen to the answers.
