Customer Value Analysis
Customer Value Analysis (CVA®) – The Basic Facts
PIMS® pioneered customer value measurement and generated the evidence on how central it is to business strategy. Customer value is the combination of customer preference and relative price. To find out more about Customer Value Analysis in detail, please have a look on our brochure.
- 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 sometimes the word “quality” is used to describe this dimension. It is much more than “quality” in terms of meeting specifications.
- Relative price measures what customers pay for your products across the range versus competitors’ closest equivalents.
- 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. There is, however, a moderate cost for getting to superior value.
Connect with our experts
The software is easy to understand so we can get you up and running remotely and quickly on a software-as-a-service basis. If your management team is considering a major customer value initiative or working on strategic initiatives that require information about the company’s position in the market place, we would be delighted to set up a meeting with you to explore the issues you are facing and how we can be of benefit.