Customer Value Analysis
The Basic Facts of Customer Value Analysis (CVA®)
PIMS pioneered Customer Value Analysis (CVA®) measurement and generated the evidence on how central it is to business strategy. Customer value: it is the combination of customer preference and relative price.
- Customer preference looks at this business versus competitors, from the specifying customer’s point of view and on all the non-price attributes that affect the purchase decision. The “wins” (better than competitors) and “losses” (worse than competitors) are totted up across all competitors and all attributes (weighting by importance). This results in a customer preference score that is the net % wins minus % losses. Note that this metric is not just “customer satisfaction”. It includes non-customers, is relative to competitors, and reflects not just the product itself, but also the service and image factors affecting the choice. Though we sometimes use the word “quality” to describe this dimension. It is much more than “quality” in terms of how well you meet specifications.
- Relative price is designated as “low” when the business’s selling price is less than that charged by competitors. 100% when it is the same, and “high” when there is a meaningful price premium.
- Customer value is NOT the lifetime net present value of a customer’s cash payments to you (weighted by retention probability): a metric often used in utilities businesses. We are looking at what the customer gets from you, not what you get from the customer.
We developed Customer Value Analysis (CVA®) software to support senior-level managers in the area of:
- Strategy development
- Pricing decisions
- Market segmentation
- Process improvement
- Company growth
Customer Value comes as close to being a panacea for business problems as anything else that has been suggested to date. Businesses offering customers preferred products or services at better-than-fair prices are more profitable. They gain market position more rapidly than those offering inferior value. Though there is a moderate cost for getting to superior value.
To learn more about the meaning of Customer Value and Customer Value Analysis (CVA®) please take a look on our latest reseach article (click here).
Contact us today
If you are working on strategic initiatives that require information about your company’s position in the market place, or the factors that drive company growth, you will find the PIMS Customer Value Analysis offering to be an invaluable tool. Should you be interested in our CVA tool, please contact us today or get in touch with one from our Consultants. We would be delighted to set up a meeting with you to give a detailed overview of our customer value analysis software and the benefits of participation.