Successful customer value management: Key lessons and emerging trends

In the past decade, firms have paid increasing attention to customer value management (CVM). Through customer-centric management systems, firms aim to maximize customer value. In this article, we put forth six important lessons that firms can employ for successful CVM, integrating available research knowledge and best practices: (1) use CVM to improve business performance; (2) ensure that CVM is more customer driven than IT driven; (3) adopt customer lifetime value as a core metric; (4) invest in strong analytical capabilities; (5) understand the key drivers of customer acquisition, customer retention, and customer expansion; and (6) manage channels to create customer value. One of the key developments in marketing and management practice in the past decade has been the growth of customer value management (CVM). Many firms have invested in large customer databases to understand, monitor, and influence customer behavior (Winer, 2001). Recent figures from Forrester show that more than 73% of large enterprises in the United States have implemented or are planning to implement customer management programs. A critical aspect of CVM is the role of customer value, or the economic value of the customer relationship to the firm. Firms aim to increase the value of their customer base by attracting new customers, retaining existing customers, reducing the costs of current customers, and selling more products or service to their customers. According to Forrester, more than 72% of B2C firms regard retaining customers as one of their top priorities (Band, 2010). As a consequence, firms continue to invest in software systems and strategies that enable them to actively manage their customers. For example, in Europe 46% of CIOs and end-users among 500 EU organizations want to invest in customer relationship management applications, according to a survey by telecommunications firm Vodafone. In addition, 45% plan to enhance their data-collection applications and 44% will upgrade their database management solutions (Diana, 2010). Conceptually, CVM has its roots in relationship marketing. 2 It entails 0263-2373/$-see front matter ª 2012 Elsevier Ltd. All rights reserved. 2 One can distinguish between customer value from a customer perspective and a firm perspective. In this article we focus on customer value from a firm perspective, thereby focusing on the (long-term monetary) value of a customer for a firm. When one focuses on customer value from a customer perspective, one is interested to what extent the firm provides value to the customer