UC Berkeley's: Customer Value Management

Acquire. Retain. Develop.

Introduction: The Vision of Customer Value Management

Companies can achieve otherwise unobtainable goals if they focus on their key asset—their customers. In this session we will show how a company was able to get out of a rut to increase revenue 6%, or $240 Million, by restructuring the organization to focus on the customer rather than the product.

Session 1: Customer Value Management

In this session, participants will learn to:

• Create a customer pyramid to segment customers based on their activity level and value
• Move companies up the customer pyramid through focused marketing efforts
• Create and use a customer migration matrix to see how your customer base changes over time
• Manage and grow a customer base by employing the Retention, Development, Acquisition (RDA) framework
• Link product and customer strategy. Participants will learn to set targets for the customer migration matrix and use these targets to drive product strategy

Session 2: Measuring and Improving Customer Value

This session will provide concrete examples, case studies, spreadsheets, and templates to enable participants to:

• Determine who their best customers are
• Calculate the lifetime value of the customer, taking into account net present value as well as customer attrition
• Decide which Retention, Development, and Acquisition strategies provide a positive return

Team Exercise 1: “Home Alarm, Inc.: Assessing Customer Lifetime Value”

Team Exercise 2: Managing Customer Migration: Identifying Opportunities for Growth

Session 3: Experimentation in Marketing Investments

This session will teach participants how to design experiments in order to determine the real effect of marketing programs. During the session, we will walk participants through several real life experiments and measure the results. After this session, participants will be able to:

• Design experiments to determine the efficacy of marketing programs
• Select target and control groups for experiments
• Determine how much of an outcome was caused by the marketing program vs. other factors
• Decide which marketing programs are worth pursuing

Session 4: Power Pricing

The Power Pricing session leaves participants with the tools to price their offerings for optimal profitability. Participants in this session will learn:

• To calculate and communicate the economic value to the customer and to use this as the basis for pricing.
• Factors affecting price sensitivity
• Price customization strategies

Team Exercise 3: Economic Value to the Customer and Price Customization Strategies