The profitability of the companies is sharply going downward, as they are under huge pressures to keep customers in the presence of intensifying competition and growing customer expectations. Many organizations will have to upgrade their approaches and strategies of satisfying and retaining customers and even renew their commitment to customer centricity to survive and beat the red ocean of competitive forces. However, as the economic climate takes a new look, it creates opportunities for companies to strengthen their declining market position by building customer value, providing a value proposition, real differentiation value, and adapting its market offerings to match the customers’ needs.
Creating customer value:
Over the years the concept of Creating customer value has changed dramatically, as, in the past, customer value was thought to be what a customer was paying for a company’s products or services. Now, this traditional view has eroded much as the actual value of a customer his present and future spending for the company. For instance, a customer who makes purchases of thousand dollars today from our company but has no intentions to buy from us in future is actually less valuable than a customer who buys goods of half that amount today, plus fifty dollars each week or month over time in future.
In addition, when satisfied customers are recommending a company’s products or services to his friends or relatives in a positive way (word of mouth), they represent non-monetary value for the company. They, in fact, provide testimonials to the company’s potential customers.
The total value that a company can get from the customers is the sum of the current value plus the potential value and the non-monetary value. The measuring of this value has a certain advantage for an organization as a customer relationship is managed on the basis of customers’ value to the organization. An organization should try to provide at least a basic amount of services to every customer as they deserve to it. However, the organization should upgrade that service and how it communicates with customers on the basis of the potential value of the customers to it. The traditional strategy of giving the same message to every customer has become wastage of time, effort as well as resources.