Customer Value Profit Chain
Value Creation is the starting point of the Customer Value Profit Chain(CVPC). Value Creation refers to the process of providing goods and services that exceed the customers’ expectations. This is done by offering innovations and breakthroughs in various areas such as quality, affordability, convenience, speed, and personalisation. By implementing these, customers are driven to demand more value for their money, increasing the demand for the offering.
The next step in the CVPC is value delivery, which is the process of providing the designed or promised value to the customers. It is essential that the customer receives the value that was promised, as this will sustain their satisfaction long-term. Companies will catch up to customer expectations by making sure that their standards are met, or exceeded. Companies are able to quickly adapt to customer demands to continuously grow and strengthen their businesses.
The third step in the CVPC is value capture, which is the process of monetising value in order to receive profit. This is done by charging customers for the value they receive and turning it into a core business model. For example, a company may create value through affordability and charge the customers less in order to capture more value. Companies may also have different value-capture strategies based on their customers’ needs such as offering discounts and other incentives.
The fourth step in the CVPC is value retention, which is the process of maintaining customers and gaining loyalty over time. Companies need to be mindful of customer demands and needs in order to retain them. Companies should aim to provide the same or higher value production levels consistently over time to drive customer loyalty. Additionally, companies should offer incentives and discounts to drive repeat customers.
The last step in the CVPC is value innovation, which is the process of staying ahead of the competition by constantly innovating and diversifying their offerings. Companies should stay informed of the latest industry trends, customer demands, and new technologies and incorporate them into their offerings in order to stay ahead of the competition. This way, companies also create more value for their customers, which further increases their loyalty.
The Customer Value Profit Chain is an important business tool for companies as it provides a structured and organized approach to creating and monetizing value for customers. By focusing on the different steps in the chain, companies can build a strong and successful business model and remain competitive in their markets. Companies that implement these steps can maximize customer satisfaction, loyalty, and ultimately profit.
