The Customer Value Management (CVM) roles in organizations typically follow one of three flavors: product-centric, coordinated, or segment-centric.
In the early stages, organizations often achieve market success with a single product, leading to rapid customer base growth. The organizational structure is accordingly focused around a single product which has a large customer base. The product owner owns the customer base and is typically responsible for customer base size, product revenue, etc. This is the product-centric CVM flavor.
This approach works well until the organization expands its product line and customers start using multiple products at the same time. As product portfolio expands, customer starts to purchase multiple products and the need to maximise the overall value for the customer emerges. In this setting, the role of Customer Value Management starts to dissociate from product ownership. Often separate roles are created that act as a “glue” between several products. This is the coordinated CVM flavor.
As organizations mature and their product portfolio expand, complexity increases. At this point a change is needed, one that blends strong product management and with strong segment management. This change is not merely strategic – it is wider shift that creates a fully expressed approach to Customer Value Management. A clear assignment and ownership of a customer segment in the organization allows the business to fully maximize impact of CVM. Stand-alone ownership of customers appears as a separate responsibility from product ownership. This is the segment-centric CVM flavor.
For visual summary see Figure 3.2.:
Figure 3.2. Summary for each CVM flavour in organization
Type 1: Product-Centric CVM
- Primary responsible person for the products is also entrusted with entirety of that product’s customer base. This naturally leads to bundled responsibilities for product pricing, promotion, distribution, and so forth.
- Financial perspective: Majority of the revenue is generated from a single product.
- Customer base perspective: Majority of customer base is attributed to a single product.
- Customer Experience perspective: Majority of customer interactions and service experience are centered around a particular product and its distribution channels.
- Internal process perspective: There exists a primary leadership figure, such as a Marketing director or Chief Commercial Officer, who supervises and integrates all aspects of the business.
From the Telco Industry:
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- A pure-play broadband service provider.
- A prepaid MVNO (Mobile Virtual Network Operator).
- A mobile service provider with primarily catering to postpaid clients.
- A pure-play Cable TV service provider.
- A pure-play OTT (Over-The-Top) service provider, like TV streaming service.
Main Activities of the CVM Role
- Focus on customer retention / contract renewal within the dominant product.
- Focus on customer upsell / price plans within the dominant product.
- Supporting customer acquisition with insights regarding the quality of acquired customers.
Typical Challenges Addressed by Role
- Conflict between acquisition and retention.
- The need for operational alignment and coordination between different channels.
- Channel fragmentation and inconsistency in pricing between channels.
- Ultra-competitive pricing strategies for new customers creates cannibalization of the existing customer base. Here, existing customers might opt to purchase a new product solely to obtain a more favorable price point.
- Telemarketing unit might promote a certain offer which the direct point-of-sale is not aware about.
- In a single product company a significant promotion is sold via digital channels, yet the physical distribution channel is not equipped or informed to facilitate the sale of the said promotion.
Type 2: Coordinated CVM
- Financial perspective: Revenue is almost evenly divided between several major products sold to the same customer segments.
- Customer base perspective: Significant portion of the customer base uses multiple products.
- Customer experience perspective: Customer interacts with multiple products simultaneously, often resulting in inconsistent communication. A negative experience with one product can negatively affect the perception of another product.
- Internal process perspective: Each segment has designated responsible figures (e.g., mobile broadband, mobile voice). In addition, there is coordinating role that ensures alignment across all products and their initiatives.
From the Telco Industry:
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- A merged mobile and fixed service operator with two major products.
- A quad-play operator offering TV, broadband, mobile, and fixed services
Main Activities of the CVM Role
From a product perspective:
- Focus on customer retention / contractual renewals for individual products.
- Focus on upsell / pricing plans within the individual product.
- Supporting customer acquisition by offering insights on the quality of acquired customers.
From a bundled perspective:
- Introduction of consolidated pricing plans that include multiple products under a single price point.
- Migration between products (e.g., from prepaid to postpaid mobile services).
- Cross-sell (e.g., offering home broadband products to existing mobile service subscribers).
Typical Challenges Addressed by Role
- Difficulties in differentiating and communicating multiple value propositions.
- Increased potential for miscommunication and conflicts between product managers.
- The need for a coordinated approach to manage product portfolio and customer base effectively.
- Addressing the complexities arising from technological, data analytics, and customer insight perspectives.
- Company might simultaneously market standalone and bundled products, causing confusion among both customers and distribution channels.
- A company might inadvertently bombard a single customer with numerous offers.
- A prepaid product introduces a pricing plan that cannibalizes the appeal of a postpaid price plan; or postpaid price plans cannibalizes revenue from best prepaid customers.
- Distinct products could be reliant on separate back-end systems/infrastructures, leading to challenges in subscribing bundled products, billing processes, customer service, and more.
Type 3: Segment-Centric CVM
- The emphasis is on market segmentation and product portfolio design focusing on key customer characteristics, much like in the B2B domain.
- Market positioning and product development are distinct, allowing a more targeted and customer-centric approach that permits same product reuse.
- In this model product focus shifts to technical and feature-centric level, with commercial and communication aspects managed by segment owner.
- Clear orientation towards the customer, enables differentiation between segments in product portfolios and bundled offerings.
- Segment owner carries the budget & commercial performance KPIs for the entire segment, inclusive of all products. The main focus is on managing overall revenue and business performance of a specific customer segment.
From the Telco Industry:
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- Brands that compete primarily on price.
- MVNO (mobile virtual network operator) brands targeting specific ethnic groups.
- Mobile device bundled for segment A, and the same mobile device bundled for segment B but a varied price.
- B2B area in most telecoms is organized according to segments: there is often clear separation of ownership of governmental accounts, enterprise accounts, and SME accounts.
Main Activities of the CVM Role
- Complete customer lifecycle management (acquisition, onboarding, upsell/cross-sell, renewal, retention, transition to another segment).
- Modifying and differentiating the product portfolio to cater to segment-specific requirements.
Typical Challenges Addressed by Role
- Resource conflicts between segments due to shared backend services.
- Potential conflicts in product pricing, revenue and cost allocation, especially when packaging products for different segments.
- The necessity to identify appropriate channels for each segment, ensuring that service delivery remains both differentiated and efficient.
- Introduces an extra layer of cost and complexity due to the need to manage multiple segments.
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