Understanding Customer Value Creation The Customer Management model (developed by QCi) described in this chapter can be used to analyse the contribution that customer management can make to the organisation. Adding value for stakeholders is an important aspect of a business proposition, for example, improving share value, employability, etc., but measuring this is usually not well performed and often results in poor understanding of critical success factors. Customer value is usually measured relative to what they have to pay either directly or indirectly (e.g. costs, taxation, etc.). In many cases, stakeholder and customer value are closely related and it is, therefore, important that organisations seek to enhance value to the customer that is only achievable through the value chain that is, all parties involved in meeting the needs of customers. It is important to recognise and retain those customers that help the organisation shape its business proposition appropriately, to align its people, processes and infrastructure. This exercise will get you thinking about how value is created and destroyed by organisations through the different activities they typically engage in to manage customers. Imagine you are a senior manager for a large organisation (pick a company that you are familiar with), for each of the following areas, list a couple of points under each of the headings: value is created by and value is destroyed by Analysis and Planning - creating value through insight, knowledge and effective planning. value is created by - understanding which customers you want to manage. - retaining those who are worth retaining. value is destroyed by - a lack of customer knowledge and insight. a mismatch of costs to revenues. Proposition - creating value through a proposition which helps you find, keep and develop those customers you want to manage. People and Organisation - creating value through effective people and partners. Processes - creating value by being customer-centric. Information and - creating value through efficiency, service and Technology (including data) intelligence. Measurement - creating value through understanding performance. Customer experience - creating value through understanding the customer experience. Customer management activities - creating value through excellent acquisition, retention, development and recovery activities. This exercise will give you a list of factors that can be applied to the business in order to help you understand how effective and efficient they are at customer management.

Question: Identify factors that may lead to the enhancement or erosion of customer relationships and hence performance.