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Jan 2003 Volume 2.12
The benefits of CVA (Final - Part six)
by Rodger Gallagher
"Using the Customer Value Added information
to achieve business goals."
The art of Customer Value Added
Achieving gains in business performance with CVA information starts
with people throughout an organisation understanding the information,
then believing that it accurately portrays the customer needs and
the market view. This requires winning the hearts and minds of all
employees in the company. Achieving this is more an 'art' than a
'science'. The usefulness and usability of the CVA information depends
to a large extent on how it is communicated, along with people acquiring
the necessary skills on how to use the information.
From experience with implementing CVA in many companies we have
found that the best way of providing the necessary skills is by
key people attending workshops based around a mix of 'how to do
it' and 'doing it'. The use of the live CVA information makes the
workshops come alive for participants. The business needs of each
company govern the agenda for these action-planning workshops. If
the company has no clearly defined value proposition then the senior
team can use the CVA map to guide the selection of one. If a brand
profile is not aligned with customer needs, then the marketing team
can create a profile that will work.
The CVA information allows quick identification of current brand
strengths together with areas needing improvement. The CVA information
can also be used at a more tactical level for businesses focused
on improving service delivery. Our experience is that many operational
managers prefer to look at improvement from the aspect of how each
individual value driver of a waterfall process step impacts on the
customer. With this customer led approach, once the individual improvement
actions have been identified, the combined effect on CVA can be
determined using a CVA econometric model, loaded into a 'What If?'
spreadsheet or Customer Value Manager software. For more information
on this software check our Web site: http://www.cvm.co.nz/products/software.htm
This allows a check to ensure the planned actions will achieve
the goals needed by the company to win in its markets.
Name-Time-Action
As well as a means of transferring knowledge to the participants,
another purpose of the CVA workshops is to develop a set of provisional
action plans. The next step after deciding on the improvement tactics
for the priority drivers, is to capture the tactics in an action
plan. To ensure the tactics get acted on, the plans need to be name-time-action
based. They need to state the name of the person responsible for
implementing the plan, and as a minimum, the date that the initial
action will be completed by. The tactics need to be listed together
with the expected improvement in the driver they will achieve in
a specified time frame. As any gain in a CVA driver will be only
measured in the next survey, it is desirable to identify internal
service metrics that can be used to track progress on a daily, weekly
or at least monthly basis. In some cases these metrics will not
exist and the action plan will need a tactic to start tracking service
delivery with an internal metric.
Business Plans
Customer Value works best when it becomes part of the fabric of
a company. One way of doing this is to incorporate Customer Value
goals, targets and tactics into the business plans for strategy,
customer relationship management systems, capital investment, operations,
marketing, and personal performance. When this is done, CVA becomes
part of the way the company is managed and how it operates, standing
alongside the financial performance measurements. So once the action
plans discussed above have been finalised, they should be incorporated
in the regular business planning and management process of a company.
Executive Reports
Executives are used to reviewing financial reports with the three
overall metrics of Income, Expenditure, and Profit supported by
detailed line item information. Customer Value Added information
is designed to be presented in a similar way. Overall Product &
Service Quality, Overall Cost & Price, and Value (Customer Value
Added) are the three overall metrics that are used. Regular composite
reports by line of business, listing results relative to the competition
for Product & Service Quality, Cost and Price, and Value (Customer
Value Added) provide the information that executives need. At other
levels of management progress on implementing the action plans can
be incorporated into the management reporting and progress tracked
towards the milestones and internal service metric goals.
Using this approach of incorporating CVA into the management fabric
of a company allows executives to pay the same attention to Customer
Value Added results at performance review meetings as they pay to
financial results. In this way they can track progress on how well
the company is doing implementing its plans, achieving its goals
and most importantly keep a track on what their competitors are
up to.
Summer Reflections
The crimson red of the Pohutakawa flowers outside our office signals
the start of the New Zealand summer, and the a chance to ease back
a bit and reflect on the past year with the approach of the Christmas
New Year holiday period.
Now in January the flowers have dropped and it's time to move from
reflecting to working.
Over the holiday period I was thinking about the incredible amount
of work we've done for clients this year, especially in the last
quarter. Virginia and I did manage to get away for a week in New
Caledonia in September just before the work intensified. I'm sure
it was those Noumea memories that kept me going till the end of
the year.
One highlight was going to a show 'Les Z'Amoureux' at La Coupole,
a restaurant near Anse Vata beach. The show featured Muriel Millon
and Teddy Malone, two French stand-ins for Hollywood nightclub stars.
And of course one thing they do well in Noumea is cuisine. For the
entrée I selected foie gras with a salad. This was followed
by a veal filet mignon in lemon on a polenta base. And of course
there was a wide and very expensive selection of fine French wines
to choose from. We selected a Sancere - it had a subtle bouquet
but the taste was full of fruity flavours. And New Caledonia in
September means strawberries, so the dessert I selected was strawberries
served with crème fraiche. All in all a great night out,
followed by a walk along the beach back to our hotel.
And in reflecting over the holiday on our time in Noumea and balancing
relaxing like this with work commitments, I've decided to devote
more time to leisure in 2003.
Regards,
Rodger Gallagher
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