Customer Value Analysis (CVA)

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Customer Value Analysis (CVA) refers to a research method that is used to identify how an organization is perceived by consumers of an organization and their competitors. The CVA is extremely important because it allows an organization to gauge how they are judged in comparison to their industry rivals.[1]

The purpose of Customer Value Analysis (CVA) is to maximize Customer Satisfaction and loyalty by measuring value, benchmarking against competitors, and identifying potential threats to customer relationships. It is important for organizations to use CVA in order to accurately gauge how their brand is perceived compared to their rivals and develop content that potential customers will find valuable and relevant. Ultimately, the goal of CVA is to generate leads and sales.

CVA represents the quintessential benefit a marketing research study can have on an organization. Customer Value Analysis empowers organizations with superior business intelligence capable of unlocking complex market opportunities. This tool helps our clients define the actions that will result in a competitive advantage.

If you are involved in a competitive industry, our customer value analysis product can serve as the cornerstone of your company's Customer Retention strategy and strategic marketing management plan. Forward Analytics has utilized the tools and metrics of customer value analysis for corporate clients, in all sectors of the economy, including producers and suppliers of industrial, consumer, and service products. While similar in appearance to traditional customer satisfaction and image and awareness studies, customer value analysis provides more accurate and useable competitive information for marketing, planning, and strategic positioning services. Built on the idea that customers measure "value", and make business decisions, based on the relationships of quality and price, Forward Analytics has designed a research methodology that evaluates the relative importance of a complete set of factors (products, services, relationships, image, and PRICE) and the perceived performance of all competitors on those factors.

The following customer value analysis chart draws direct comparisons between you and your competitors. The market-perceived quality profile and market-perceived price profile are the heart of customer value analysis. The information provided is essential in generating a successful customer retention strategy. Each bar represents how much better or worse your company is performing on all factors, or attributes, relative to the competitor. This comparison includes both quality and price perceptions. If the bar extends to the right, your company is perceived as performing better than the competitor and represents an opportunity for market share gain. If the bar extends to the left, you are perceived as performing worse than your competitor on that attribute.

Customer Loyalty Map

While the length of the bar indicates the comparative strength (or weakness) of the market-perceived performance, the thickness of each bar is proportionate to the importance weight of the attribute according to your customers and potential customers. Also, the thickness in the price bar is proportionate to its importance relative to the overall combined thickness of quality factors.[2]

Measuring Customer Value[3]

There are the following important ways you can use to measure customer value. Let’s check them out.

  • Identify Customer Benefits: Below are some of the factors that are closely tied to customer benefits.
    • Product or service quality
    • A better solution
    • Unique customer experience
    • Customer service quality
  • Total Customer Costs: Segment your customer costs into tangible and intangible costs.
    • Tangible Costs
      • The price of your product or service
      • Installation or onboarding costs
      • The cost of accessing your product or service
      • Maintenance costs
      • Renewal costs
    • Intangible Costs
      • Time invested in buying your product or service
      • A poor customer experience
      • Physical or emotional stress people suffer because of buying or installing your product
      • A poor brand reputation
  • Time spent understanding how your product or service works
  • Find the Difference Between Customer Benefits and Customer Costs
  • Use the formulas below to calculate customer value analysis (CVA).
    • Customer value analysis (CV) = Total Customer Benefits – Total Customer Costs

Benefits of Customer Value Analysis (CVA)[4]

One of the tools used in a customer value analysis is the customer survey. The purpose of the survey is to provide customers with the opportunity to share their thoughts on specific goods or services offered by the company, along with comments and critiques that could be used to help enhance some aspect of the product. Data collected using this customer satisfaction tool can influence the nature of the product itself, or possibly have an impact on the marketing and sales techniques used to present those products to new and potential clients. As a bonus, this process of customer satisfaction marketing helps increase rapport with customers, which only aids in increasing customer loyalty.

Another benefit of customer value analysis is gaining a better understanding of how customers make use of the products, and how they perceive the cost in relation to those uses. This can sometimes help a company that offers average-quality goods to get insights into why a company that offers a superior product can command higher prices and still capture more market share. From this perspective, a customer value analysis is not supposed to reinforce the company’s concept of itself, but provide the incentive to improve and push quality boundaries while still offering products that consumers will view as being priced equitably.

See Also