Why Real-Time Customer Value Management is Essential

Customer Experience Management, or CEM, has become a key topic in the telecoms industry, helping to introduce a so-called customer-centric approach that shifts the emphasis of service providers to how they consider all aspects of their relationship with customers, rather than simply the services they deliver to them.

CEM, however, has itself evolved and, today, we are entering a new phase in the understanding of the relationship between service provider and customer, as new insights have unlocked further insights. One aspect of this is the emerging study of Customer Value Management (CVM), which, while it sounds like another set of buzzwords, offers great potential to service providers. So, what is CVM and why does it matter?

Consultants Strategy&* define CVM as a “holistic way of evaluating individual subscribers in terms of their overall profitability, now and in the future.” In other words, it’s a way of understanding each subscriber and how you can use this knowledge to increase their overall value to the service provider, individually and collectively. As such, it’s a step beyond classical metrics traditionally used by service providers, such as net subscriber additions, market share and the like – and it moves away from aggregated measures, such as ARPU to a deep focus on the revenue and profitability of any given user and how that can be increased.

Management consultancy ICME** suggests that, broadly speaking CVM has four key pillars:

1. Recruiting new customers and winning back lost customers
2. Retaining existing customers
3. Selling more products, services and offers to increase ARPU
4. Reducing the costs of current customers

Of course, this has much in common with CEM, but while CEM is focused on perception, measured or otherwise, CVM is more concerned with the impact of different practices and approaches on the revenue that results – and the outcome of initiatives aimed at growing revenue. As such, CVM has a number of aspects and there are several tools available to help implement CVM in an organisation. As O’Reilly*** has noted, these include:

• Customer relationship management (CRM)
• Customer identification
• Contact management
• Campaign management
• Advanced data modelling
• Customer scoring

The effective use and combination of these adds up to a better estimate of an individual’s value and provides ways through which it can be increased. For example, customer scoring underpins all CVM efforts, as it provides a measure of appetite and readiness to accept new offers and promotions, helping service providers target their efforts more effectively.

But within this emerging field, insufficient attention has been paid to the real-time nature of telecoms services and individual engagement. Real-time services generate real-time data and demand real-time responses. What’s more, they should be contextualised, so that they reflect other factors that influence subscriber behaviour, as well as known facts regarding specific individuals.

That’s why, at Digitalk, we’ve invested in creating the ability to enable Real-Time Customer Value Management that’s full aligned with contextual information. It’s a key element of our MVNE as a Service solution, which means that our partners obtain accurate, detailed insight into customer behaviour that, in turn, allows them to optimise campaigns, promotions, offers and a host of other business capabilities to meet the needs of customers.

Crucially, we think, like Strategy&, that the future aspect of CVM is of crucial importance. As customers become increasingly fickle and as they are confronted with an increasing array of future offers, predicting future needs and behaviour has become a critical differentiator. The ability to more accurately anticipate what they want will be a key contributor to the overall goal of increasing value, so being able to do so from the outset could be the key to your long-term success. 

* Strategy& “Customer Value Management – the path to profitable growth in telecom”
** ICME Insight “Customer Value Management”
*** Vincent O’Reilly, Boston College