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<span id="openzim-page-title" class="mw-page-title-main"><span class="mw-page-title-main">Customer value model</span></span>
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<p>Within <a href="Customer_relationship_management" title="Customer relationship management">customer relationship management</a>, a <b>customer value model</b> (CVM) is a data-driven representation of the worth, in monetary terms, of what a company is doing or could do for its customers. <sup id="cite_ref-1" class="reference"><a href="#cite_note-1"><span class="cite-bracket">[</span>1<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-oak2_2-0" class="reference"><a href="#cite_note-oak2-2"><span class="cite-bracket">[</span>2<span class="cite-bracket">]</span></a></sup> Customer value models are tools used primarily in B2B markets where the choice of a given product, service, or offering is based primarily upon the amount of customer value created. Customer value is defined as value = benefits minus price. Thus, customer benefits are quantified in a CVM; product features and capabilities are translated into dollars. Customer value models are different from <a href="Customer_lifetime_value" title="Customer lifetime value">customer lifetime value</a> models, which seek to quantify the value of a customer to its suppliers.
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<div class="mw-heading mw-heading2"><h2 id="Firms_using_customer_value_models">Firms using customer value models</h2></div>
<p>Many firms have been reported to use customer value models,<sup id="cite_ref-3" class="reference"><a href="#cite_note-3"><span class="cite-bracket">[</span>3<span class="cite-bracket">]</span></a></sup> including <a href="General_Electric" title="General Electric">General Electric</a>, <a href="Alcoa" title="Alcoa">Alcoa</a>, <a href="W.W._Grainger" class="mw-redirect" title="W.W. Grainger">W.W. Grainger</a>, <a href="Qualcomm" title="Qualcomm">Qualcomm</a>, <a href="Sonoco" title="Sonoco">Sonoco</a>, BT Industries Group, <a href="Rockwell_Automation" title="Rockwell Automation">Rockwell Automation</a>, and <a href="Akzo_Nobel" class="mw-redirect" title="Akzo Nobel">Akzo Nobel</a>.
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<div class="mw-heading mw-heading2"><h2 id="Uses_of_customer_value_models">Uses of customer value models</h2></div>
<ol><li>New product and service development and refinement: The dialog and customer immersion that is part of a CVM is used to discover and determine which potential product features and functionality would create the most value for customers. This on-site interaction can be used to frame and define those features and functionality. Often a key is to focus on product or service capabilities rather than on features. Successful CVM efforts change the basis of the customer-supplier product conversation away from features and functions and toward problems, benefits, and value.<sup id="cite_ref-oak_4-0" class="reference"><a href="#cite_note-oak-4"><span class="cite-bracket">[</span>4<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-5" class="reference"><a href="#cite_note-5"><span class="cite-bracket">[</span>5<span class="cite-bracket">]</span></a></sup></li>
<li>Sales tools: CVMs can serve as a quantified statement of value and benefits for a customer that is used by the vendor sales staff to both sell into a new account, as well as to reaffirm and validate value created for current customers as a means to retain and grow current customer. CVMs also can help firms to determine the more rational promotion cost.<sup id="cite_ref-oak_4-1" class="reference"><a href="#cite_note-oak-4"><span class="cite-bracket">[</span>4<span class="cite-bracket">]</span></a></sup></li></ol>
<div class="mw-heading mw-heading2"><h2 id="Customer_value_model_methods">Customer value model methods</h2></div>
<p>There are several methods and approaches used to create customer value models. All of these approaches appear to depend on substantial customer interaction and on-site interviews and observations of customers' challenges related to the product or service being valued. The CVMs are of varying complexity. One consulting firm has found it useful to reverse-engineer customer P&Ls (profit and loss statements) to establish a clear connection between the product benefits and the customer bottom-line.<sup id="cite_ref-oak_4-2" class="reference"><a href="#cite_note-oak-4"><span class="cite-bracket">[</span>4<span class="cite-bracket">]</span></a></sup>
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<div class="mw-heading mw-heading2"><h2 id="References">References</h2></div>
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<li id="cite_note-1"><span class="mw-cite-backlink"><b><a href="#cite_ref-1">^</a></b></span> <span class="reference-text">Anderson, James C; and Narus, James A, (1998), "Business Marketing: Understanding What Customers Value", Harvard Business Review, March, p 53-65</span>
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<li id="cite_note-oak2-2"><span class="mw-cite-backlink"><b><a href="#cite_ref-oak2_2-0">^</a></b></span> <span class="reference-text">Dupuie, Jeff: <a rel="nofollow" class="external text" href="http://0101.nccdn.net/1_5/35d/340/3cb/OakStone-Using-Customer-Value-Models-to-Improve-B2B-NPD.pdf">Using Customer Value Models to Improve B2B New Product Development</a> <a rel="nofollow" class="external text" href="https://web.archive.org/web/20151123020407/http://0101.nccdn.net/1_5/35d/340/3cb/OakStone-Using-Customer-Value-Models-to-Improve-B2B-NPD.pdf">Archived</a> 2015-11-23 at the <a href="Wayback_Machine" title="Wayback Machine">Wayback Machine</a>, OakStone Partners</span>
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<li id="cite_note-3"><span class="mw-cite-backlink"><b><a href="#cite_ref-3">^</a></b></span> <span class="reference-text">Anderson, James C; Narus, James A; and van Rossum, Wouter, (2006), "Customer Value Propositions in Business Markets", <i><a href="Harvard_Business_Review" title="Harvard Business Review">Harvard Business Review</a></i>, March, p 91-99</span>
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<li id="cite_note-oak-4"><span class="mw-cite-backlink">^ <a href="#cite_ref-oak_4-0"><sup><i><b>a</b></i></sup></a> <a href="#cite_ref-oak_4-1"><sup><i><b>b</b></i></sup></a> <a href="#cite_ref-oak_4-2"><sup><i><b>c</b></i></sup></a></span> <span class="reference-text">Dupuie, Jeff: <a rel="nofollow" class="external text" href="http://0101.nccdn.net/1_5/35d/340/3cb/OakStone-Using-Customer-Value-Models-to-Improve-B2B-NPD.pdf">Using Customer Value Models to Improve B2B New Product Development</a> <a rel="nofollow" class="external text" href="https://web.archive.org/web/20151123020407/http://0101.nccdn.net/1_5/35d/340/3cb/OakStone-Using-Customer-Value-Models-to-Improve-B2B-NPD.pdf">Archived</a> 2015-11-23 at the <a href="Wayback_Machine" title="Wayback Machine">Wayback Machine</a>, OakStone Partners</span>
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<li id="cite_note-5"><span class="mw-cite-backlink"><b><a href="#cite_ref-5">^</a></b></span> <span class="reference-text">Lindstedt, Per and Berenius, Jan, (2003), "The Value Model: How to Master Product Development and Create Unrivaled Customer Value", Nimba Publishers</span>
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