Changing the Rules of the Game

Originally published 6 April 2009

No matter what†industry an organization operates in, there are set of widely accepted business strategies that differentiate the company from its competitors and are necessary to succeed in that particular area. A few of these strategies such as positioning, branding, product innovation, business modelling, conventional above-the-line marketing and promotion are the ones that come to mind initially. But, it is clear that the measure of success has shifted in recent years for all companies across a range of industries but particularly in the telecommunications sector.

Mobile operators are facing a real challenge in these though economic times. In an environment where churn rates are growing due to the new offers and average revenue per user (ARPU) is steadily decreasing, most mobile operators realise that conventional marketing practices will not answer their needs. Where does the solution lie? Here comes the new challenger. Customer value management (CVM), or customer life cycle management (CLM), provides the key to operating in this new competitive environment.

New Challenger

CVM is simply the life cycle management of the customer to ensure that the value of the customer is maximised throughout his/her entire relationship with the company. It is all about focusing on specific customers (or subscribers in the telecommunications industry) who can be high value and profitable to the company and managing their relationship with the company.

There are many important aspects in the CVM area such as:

  • Identifying the customers, knowing each and every detail about their transactions†
  • Deriving valuable insight from the data warehouse environment to explore possible initiatives to differentiate customer interaction strategies
  • Fully understanding their behaviours and individualizing them
  • Quantifying customer value
  • Defining key customer value drivers across the customer life cycle

Many leading telecom operators have initiated CVM programmes in a search for improving the customer experience, customer value growth and effective management of the customer. For such a large programme to be successful, companies should align their business units with IT capabilities. Truly identifying marketing strategies that focus heavily on customer analytics and intelligence is the critical. Yet, innovative IT execution is another key element that should not be overlooked. It is an end-to-end process linking all the corresponding parties including IT, marketing, customer interaction channels and finance. Figure 1 shows a simple illustration of all the relevant parties each of which play a very crucial role in the CVM life cycle

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Figure 1: Roles in Customer Value Management Life Cycle

Never-Ending Journey

Customer value management is a never-ending journey, beginning at the time of customer acquisition and continuing with development of the relationship with your customer, with the aim of retaining the valuable ones with the targeted campaigns and letting less valued customers go away. Success on this journey is very challenging, and it pays off because the benefits are outrageous. CVM not only improves companiesí ability to streamline their internal processes and align them with the customer but also directly affects the financial performance with very substantial increases.

I believe this is worth the effort to establish a proven CVM approach throughout the organization. It will help executives drive their organization based on its customer expectations, resulting in competitive advantage and higher returns.

Customer satisfaction is the single best leading indicator, showing whether the business is doing well or poor. The customer satisfaction metric cannot always tell you what the customer wants but it does tell you when something are going wrong. And every time customer says that something is wrong, it is an opportunity. Letís take this great opportunity to discover who are customers are and what they want.

  • Korhan YunakKorhan Yunak

    Korhan Yunak is a Global CRM Business Analyst at Vodafone Group, based in Dusseldorf, Germany, where he is responsible for business intelligence strategy, data warehousing best practices as well as the customer value management program within the group. He currently works on customer value management practices, BI strategy and customer analytics focusing more on the CRM area to cover the big picture around business intelligence. He has more than 6 years of practical project experience helping companies establishing enterprise data warehouse solutions and building BI vision.

    Early in his career, Korhan was involved in various enterprise performance management (EPM) and BI engagements in wide variety of industries including telco, banking and retail as a consultant. Korhan has extensive experience, combining technical and business acumen, especially in telecommunication industry.  Korhan holds a degree in Management Information Systems from Bosphorus University.

    Korhan can be reached at +491732620423 or kyunak@gmail.com.  

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Posted 11 May 2009 by MEHMET BUTUN

this article has actually cathed up the important aspects of CVM..congratulations and thx.

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