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 the customers in these segments, the customer value propositions should highlight the key
points-of-difference that deliver the greatest value to these customers.
