Ishan Rohit, IMT Ghaziabad

Customer Value : It matters

Introduction
Gone are the days when customer was synonymous with the word ‘casht se mar’ (Hindi, meaning: dying out of stress). Customers are God today, who Generate the revenues, make businesses Operate and even Destroy the incompetent.

Most of the markets are monopolistic which leave little room for price making. A large number of competing firms in the same level playing field are in a frenetic fight to increase their customer base. This can be achieved through either eating into the competitor’s share or creating a new market. As the population keeps growing, the latter do happen more easily, but at a relaxed pace. The exponential growth can be touched by snatching market shares.

Why Customer value ?
Customers have numerous options to choose from. At the first instant, they may go by their instinct and buy a particular product. This may have been a result of an advertisement, advice of a family friend or even persistence of their children. Similar to the idiom “It’s easy to reach the top, but staying there is difficult”, it can be inferred that it’s easy to acquire a customer, but it’s difficult to retain him/her.

Gauging by the Pareto analysis that 20 percent of customers bring 80 percent of revenues, Customer value to an organization holds importance. Customer Lifetime value, judged by the amount of a product bought during the customer’s lifetime helps to ascertain his worth to the company. If he is a high value customer, the management can then decide to focus on him and increase his satisfaction levels. This can be aided by specific offers and delightful rewards, which can be in the form of birthday or anniversary gifts. A customer-company relation can be transformed to a more informal one. Even to an extent that the customer can act as an influencer among his group propagating word of mouth publicity about the company.

When marketers sit with the existing customers list and wonder how to meet targets within the specified time, they have a helpline in the form of Customer value. They can easily neglect ‘Lead’ Customer who have generally been disinterested and increased customer retention costs of the company. A brighter focus on the gold and platinum customers saves communication and time costs, at the same time decreasing the customer churn rate.

Analyzing through Customer value
Defecting profitable customers must be counseled for their experiences which propelled them to take the decision. Since they have a useful insight into the company’s services, they may be able to pinpoint a fault which could have been neglected. Even best of the processes and practices are sometimes not providing that ‘wow’ factor for the customer. The reasons have to be looked into, as they are reported by valued customers.