The Work of Customer Value Managers
The essence of CVM work is to drive business impact, ideally increasing Customer Lifetime Value (CLV). This is reflected in the KPIs delegated to CVMs by top management: revenue, retention, and customer experience. However, the question remains: how to achieve this?
Figure 5.1. CVM Work diagram
From the company’s perspective, CVM work involves ensuring customers remain loyal, use more services, and spend more money. This perspective answers the question, “What do we as a company want from customers?” (see Figure 5.1.).
Organization understands CVM activities as upselling, cross-selling, deep-selling, retention, and loyalty campaigns, etc. In summary, “CVMs deliver the right offer, through the right channel, at the right time.”
However, revenue comes from customers, so it’s important to consider their perspective as well. We can start understanding this perspective by answering the second question: “What do customers want from the company?” (see Figure 5.1.).
Customers definitely don’t think about up-sell, cross-sell, deep-sell or higher revenue in the company. Customers buy products and services to meet their specific needs.
This context makes the CVM role inherently challenging, as it requires balancing business objectives with customer needs.
CVMs deliver their results by undertaking a variety of critical tasks:
- Managing transformational projects, such as the introduction of the Next Best Offer Program.
- Running existing programs, such as overseeing daily processes of Lifecycle Management.
- Executing ad-hoc activities, such as implementing specific, one-off campaigns.
It is common for up to 50% of CVM work to involve ad-hoc challenges such as responding to competition, driving specific product or service sales, and implementing new regulatory communication policies. Due to their unique nature, these tasks are difficult to describe and standardize best practices for. Therefore, this guide will focus on the strategic CVM programs that are common for most of CVM professionals.
CVM Program definition
A CVM Program is a comprehensive initiative that includes multiple activities, customer journeys, and business processes to achieve specific business results and improve customer outcomes. Examples of CVM Programs include:
- Customer Lifecycle Management program
- Loyalty program
- Referrals program
- Up-sell, Cross-sell, Deep-sell programs
- Proactive Customer Service program
- Payments Collection program
- Next Best Offer Program
- Next Best Action Program
Before diving into each program, defining building blocks of success in CVM is needed.
Customer perspective
Customers generate revenue for the company by purchasing products and services that meet their specific needs.
They interact with the company through various products and communication channels, where their needs are met and purchase decisions are made.
Each customer interaction has specific objectives and underlying expectations, such as:
| Objectives | Expectations |
|---|---|
|
|
When customers pursue their goals, they go through a series of interactions called the Customer Journey. This journey starts when they initiate contact and ends when their objectives are met. For example, a customer buys a new mobile device from with insurance, and a few weeks later, the device is accidentally damaged. The customer will go through the “Fixing the Broken Device” journey.
- Customer Awareness Stage:
- Contact Initiation: Calls the call center, visits the store, or searches online for information.
- Registers the phone damage and gets answers to questions:
- Will insurance cover the damage?
- What should I do next?
- Where and how should I bring the device for repair?
- Phone Delivery to Repairs Stage:
- Planning and Travel:
- Plans the trip to the nearest repair store.
- Travels to the repair store.
- Waits in line at the repair store.
- Device Drop-off:
- Explains what happened to the repair store employee.
- Inquires about the safety of private information on the phone.
- Asks about the repair duration and how they will be informed about the progress.
- Presents necessary documents for insurance coverage.
- Leaves the device at the repair store.
- Planning and Travel:
- Waiting for Repair Stage:
- Repair Progress:
- Waits for notification about the repaired phone.
- If the wait is longer than expected, calls or emails the repair store.
- Receives confirmation that the phone is repaired.
- Repair Progress:
- Collecting the Repaired Phone Stage:
- Pickup and Setup:
- Plans the trip to the repair store.
- Travels to the repair store.
- Waits in line at the repair store.
- Settles the payment, such as an unconditional deductible.
- Collects the repaired device from the store employee.
- Returns home.
- Phone Setup:
- Sets up the phone.
- Recovers private data.
- Starts using the phone as usual.
- Pickup and Setup:
Throughout the Customer Journey, there are critical moments known as Moments of Truth (MoT), where the customer’s perception and behavior towards the company can change significantly. These moments occur when customer expectations are either met or unmet. If expectations are significantly unmet, these moments can greatly impact overall satisfaction and loyalty.
Continuing with the “Fixing the Broken Device” journey, the customer aims to repair their broken phone and resume using it as usual. Along with this objective, the customer’s expectations include:
-
- The shattered screen repair will be covered by insurance.
- The repair process will be simple and fast.
- Staff members will be respectful.
- The staff will value their loyalty.
- Their phone will be repaired as soon as possible.
- They will be proactively informed about the repair process.
- Their private data will be safe and recoverable after the fix.
If these expectations are met, the customer will be highly satisfied, and their loyalty will increase.
However, if these expectations are not met, the customer’s loyalty can be lost. For instance, if a customer buys device insurance expecting it to cover accidental screen damage but finds it does not, the company risks losing the customer’s trust and future business. This could result in the customer never buying insurance from the company again or even leaving the company. Another example is if the repair takes three months to complete, significantly missing the customer’s expectation for a quick fix.
When designing programs, CVMs must ensure they address the question, “What do customers want from the company?” This involves identifying the journeys their customers experience, defining clear customer objectives, and understanding their expectations. Most importantly, CVMs must ensure the program addresses these customer needs and measures the impact from the customer’s perspective.
Company’s perspective
The company operates within a specific context that includes (illustrative example):
- Business Context: Market conditions, competitor actions, regulatory environment, technology trends, etc.
- Business Objectives: Financial KPIs, Net Promoter Score KPIs, launch of new or strategic products, etc.
- Business Strategy: Priorities, focus areas, constraints, etc.
This context defines the KPIs and objectives set by top management for Customer Value Managers (CVMs): increasing revenue, boosting retention, and improving customer experience. CVMs use these KPIs to develop programs designed to address business challenges.
As explained in the Customer Perspective section, customers expect their needs to be met throughout their journeys. With only a few CVMs and millions of customers, it is impossible for a CVM alone to handle all customer journeys and meet their expectations.
CVMs must leverage and coordinate the organization’s people, processes, technology, products, communication channels, and data. They align cross-departmental teams without direct authority. Any failure within the organization can undermine the entire program’s effort and impact.
Therefore, when designing CVM programs, CVMs must consider the business KPIs they aim to influence and define clear, end-to-end business processes necessary for effective implementation.
Program’s definition template
A comprehensive CVM Program definition should include the following components:
- Purpose: Define the overall purpose of the CVM program, aligning it with the company’s strategic goals and addressing specific customer needs.
- Program Outcomes: Describe the expected outcomes of the program. This should include both business outcomes (e.g., increased revenue, improved NPS) and customer outcomes (e.g., higher satisfaction, quicker issue resolution).
- Business Case: Justify the need for the CVM program by outlining the business rationale, including expected return on investment (ROI), cost-benefit analysis, and alignment with strategic priorities.
- Customer Journeys to be Impacted by the Program: Identify the key customer journeys that the program will impact. For each journey, provide the following details:
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- Journey Name: The specific name of the customer journey.
- Objective: The main goal of the customer in this journey.
- Expectations: What customers expect to achieve or experience during this journey.
- KPIs to Measure: Key performance indicators to track the success of the journey from a customer perspective.
- Program Activities: Outline the activities and initiatives that will be undertaken within the program. This can include marketing campaigns, customer support improvements, technology upgrades, or process enhancements.
- Business Processes: Detail the business processes that need to be established or modified to support the program. This can involve workflow changes, new technology implementations, or cross-departmental coordination.
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