How to Generate Customer Value
It is essential to carefully choose your Customer Value Proposition. Both value creation from the customer as well as the corporate viewpoint gain from consistent and deliberate focus on key market segments and core competences. This results in a mutual exchange of value, which will stabilize and strengthen your competitive position.
There are many possible criteria to measure corporate performance like market share, turnover, profit, number of products sold, etcetera. Aggregate turnover, sales volume or market share do not necessarily provide a reliable picture of the (financial) performance of a company. For example, a large market share could have been acquired at too high cost, and as a result the profit per customer may be dangerously low.
Measuring customer profitability is vitally important to target the right prospects. Companies want to spend their marketing resources where this will generate the highest payoff. This requires insight in cross- and up-sell potential. It is not just current profitability, but also the development of customer profitability over time that is important. Insight in both is necessary to evaluate the ROI of marketing spend.
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