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A review of Successful customer value management: Key lessons and

emerging trends
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Table of Contents

Contents Page
Table of Contents.............................................................................................................................2

1. Introduction..............................................................................................................................3

2. Knowledge gap.........................................................................................................................4

3. Methodology............................................................................................................................4

3.1. Improve business performance.........................................................................................4

3.2. Comparing customer value management with IT driven..................................................5

4. Results......................................................................................................................................5

4.1. Emerging perspectives on managing customer value.......................................................5

5. Conclusion................................................................................................................................7

Reference.........................................................................................................................................8
1. Introduction

In the 21st century, developments in marketing and management practice have been measured by
customer value management. This reviewed article gives emphasis on customer value.
According to Winer (2001), as cited in this reviewed article, firms must make a customer
database to monitor and influence customer behavior. A critical aspect of customer value
management is the role of customer value or the economic value of the customer’s relationship
with the firm. Firms aim to increase the value of their customer base by attracting new
customers, retaining existing customers, reducing the costs of current customers, and selling
more products or services to their customers. Subsequently, firms continue to invest in software
systems and strategies that enable them to manage their customers actively. Conceptually,
customer value management has its roots in relationship marketing. It entails maximizing the
value of a company’s customer base and analyzing individual data on prospects and customers.
Firms then use the resulting information to acquire and retain customers and to drive customer
behavior with developed marketing strategies in such a way that the value of all current and
future customers is maximized. In customer value management, determining and maximizing the
value of a firm’s customer base is one of its core goals. In this article, six important customer
attractions provided are;

1) attracting new customers,

2) increasing customer retention,

3) creating customer expansion,

4) winning back old customers,

5) supporting (active) relationship termination, and

6) effectively allocating resources among customers

Important developments in information and communication technology, which have enabled

firms to build large customer databases with real-time access at customer touchpoints, and the
development of strong software packages for analyzing these data have accelerated interest in
and application of customer value management. This research article showed that those uses
technology, such as Capital One, Harrahs Entertainment, IBM, U.K.-based retailer Tesco, and
the Dutch mobile phone operator KPN have, consequently, invested heavily in customer
management.

In this article, six lessons and three emerging perspectives on managing customer value are
strongly provided. The six lessons have insights from marketing science and insights from
practice. And, three emerging perspectives are managing customer engagement, managing
customer networks and managing the customer experience.

2. Knowledge gap

The only knowledge gap in this article is that the methodology used to work on this research
article is not properly stated, and otherwise, this article is attractive for management thoughts and
knowledge sharing for customer attraction and management.

3. Methodology

3.1. Improve business performance

This review article reported that to improve business performance, the insights from the practice
are essential. This article also focused on gaining a competitive advantage and improving
performance the customer value management approach is critical. According to this article,
customer value management can improve business performance in three ways: (1) customer
value management market-based resource for competitive advantage, (2) customer value
management increases a firm’s customer-centric orientation, and (3) customer value
management leads to more accountable marketing. A firm’s customer database and existing
customer relationships are important market-based resources because they are difficult to
develop and copy. Database about the customer is acquisition and retention data improves
business performance. Research also supports managing high potential customer’s leads to high
economic performance (Becker et al., 2009).

Insights from practice has a core value to measure the customer value management. Customer
value management implementation can affect performance in several ways. For example,
Telenor, the seventh-largest mobile operator in the world, has developed such an approach.
Using various metrics to assign each customer a value, Telenor focused its retention efforts on a
subset of customers. In addition, Telenor used customer life-cycle management. However,
perhaps the most convincing and insightful evidence is provided in published implementations of
customer value management by Kumar et al (2008). This article is convincing article for
customer management and it agreed with the idea of management thought reported by various
researchers for example, Kumar (2008) has reported extensively on customer value management.
In their implementation of customer value management, the firms estimated the customer
lifetime value for each individual customer, taking into account the customer’s next purchase
probability, contribution margin, and predicted individual customer-level marketing costs. This
research article used advanced econometric modelling techniques, the firms derived individual
predictions for customer value.

3.2. Comparing customer value management with IT driven

Interested idea has raised in this article as insights from marketing science, despite attracts of
customer value management for firms, many implementations still fail. A common hazard is that
firms assume that applying more technology is the problem for customer value management.
This happen as a results of too much focus on the IT side of customer value management rather
than the customer side. One important issue is the role of technology in the overall
implementation of customer value management.

One interested idea in this article is comparing the internal and external of the customer value
management; since software like IT driven focused only internal. This is due to some firms focus
too much on the technological aspects of customer value management and the requisite financial
investments in such technology. When firms focus extensively on such specifications, resources
frequently move to technology solutions, software, and consulting agencies implementing the
technology. In such cases, the focus usually becomes more internal than external, damaging the
performance potential of customer value management.
4. Results

4.1. Emerging perspectives on managing customer value

This article focused on three emerging perspectives to manage customer; these are (1) managing
customer engagement, (2) managing customer networks, and (3) managing the customer
experience.

Managing customer engagement is making networked society in which customers can interact
easily with other customers and firms through social networks and other new media. This article
observe, that firms are increasingly pursuing strategies that encourage non-transactional
behavior. For example, leisure firms proactively ask recent customers to provide ratings on
independent comparison websites. Firms also understand the potential strong negative
consequences of non-transactional behavior if not managed properly. The term ‘‘customer
engagement’’ has been mentioned as an important new trend within customer value management
reflecting these important changes. As stated by researchers of this article, customer engagement
behaviors go beyond transactions and specifically reflect customer’s behavioral manifestations
that have a brand or firm focus, beyond purchase, resulting from motivational drivers. For firms,
the key challenge is to identify the different actors, places, and content. For some types of
customer engagement behaviors, such as word of mouth, online reviews, and recommendations,
research suggests how to assess their extent and impact. When evaluating customer engagement
behaviors, firms should consider the likely consequences in terms of both short- and long-term
objectives.

This article presents, the translating customer engagement behaviors into financial metrics can
also improve decision making about the customer base, especially the engaged customer base.
Customer engagement value can be quantified into different components, including customer
influence value, customer referral value, and customer knowledge value (Kumar et al., 2010).

The other emerging perspective briefly reported in this article is the managing customer
networks. This type of managing customer is internet network based. Historically, Internet usage
has increased tremendously, and consumers use it to search for information. This trend of digital
communication and the increased availability of data that comes with it have encouraged
marketing scholars to analyze the role of networks in consumer’s decision-making processes.
Working on researches used to quantify the effects of networks on customer adoption decisions
and has implications for customer management practices. Certain customers may be more
valuable than assumed, especially those who are critical in influencing other customers to adopt
new services or buy new product offerings. Using network analyses, firms may be able to detect
customers with high social influence.

Managing customer networks not only social influence adoption decisions, but it also plays a
role in customer retention decisions. Understanding these customer networks will become
increasingly important to managing customer value. According to the researchers of this article
and in my understanding, that makes this topic interested is has a the aim of establishing the
effects of networks on customer behavior, quantification of the network value of customers, and
the use of new social media to influence customers. This idea agreed with the scholars who
working on related topics (Haenlein, 2011; Risselada, 2012).

5. Conclusion

This article is well summarized and tells us about the future models working on customer value
management using data from different sectors based on six lessons provided in the article.
Reference

Becker, J. U., Greve, G., & Albers, S. (2009). The impact of technological and organizational
implementation of CRM on customer acquisition, maintenance, and retention.
International Journal of Research in Marketing, 26(3), 207–215

Risselada, H. (2012). Analyzing behavior in customer relationships accounting for customer-to-

customer interactions. Dissertation, University of Groningen.

Haenlein, Michael. (2011). A social network analysis of customerlevel revenue distribution.

Marketing Letters, 22(1), 15–29.

Kumar, V., Venkatesan, R., Bohling, T. R., & Beckmann, D. (2008). The power of CLV:
Managing customer lifetime value at IBM. Marketing Science, 27(4), 585–599.