Measuring and managing customer value

Customer value management (CVM) aims to improve the productivity of marketing activity, and the profitability of business by identifying the value of different customer segments and aligning marketing strategies, plans and resourcing accordingly. There are two complementary approaches to CVM. The first attempts to measure and evaluate the perceived value placed on goods/services by customers. This information is used as the basis of continuous review and improvement of those goods/services. The second approach measures the value of specific customers, or customer segments, to the organisation and uses this to tailor marketing activity. Addressed together these approaches ensure that both sides of a business relationship gain added value. This paper explains the concept of CVM and key issues in using it to drive more effective marketing activity.