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June 1997 Volume 1.10
First Public Seminar on Customer
Value Management
26-27 June
Ritz Carlton Hotel Double Bay
Sydney
New South Wales
The Key for Business Success in the Next Millennium:
An intensive two day program led by international experts, Ray Kordupleski
(former Customer Satisfaction Director, AT&T) and Rodger Gallagher
(past leader of many customer service & satisfaction projects
at Telecom New Zealand). Early adopter companies are gaining a competitive
advantage through a greatly accelerated ability to retain customers
and attract new ones by using the Customer Value Management approach.
Now for the first time in Australasia comes a chance to attend a
public seminar on Customer Value Management.
Who should attend:
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Executives wanting to master the new tools to
improve profitability
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Customer Service Managers who need to meet and
exceed customer expectations
-
Business Development, Marketing and Product Managers
concerned with increasing profitability
Presented by Graeme Boorer, Corporate Strategies International.
Delegates from New Zealand attending the seminar are eligible for
the special package of $A1850 covering the conference registration,
return economy airfare and two nights accommodation.
All enquires to:
Corporate Strategies International
Ph.+61 2 9923 1011
Fax +61 2 9923 1021
e-mailboorerg@corstrat.com
Level 2
1 McLaren St
North Sydney
NSW 2060
Australia
When I turn this knob
While Impact Weights allow us to know which knob to
turn, elasticities allow us to determine precisely what happens
when we turn a knob. We saw last month how impact weights can be
used to find out if customers are buying on price or on quality.
Wouldn't it be useful to know how much market share and Customer
Value Added would increase by, if say perception of Price and Cost
was improved?
Elasticity is a concept borrowed from engineering
materials science. In that context, if you push an object hard,
and it stretches a little bit, then it is highly inelastic (e.g.
a steel bar). On the other hand if you push an object a little bit
and it stretches a lot then it is highly elastic (e.g. a rubber
band).
Marketers often talk about a product of having strong
price elasticity. They mean that a small reduction in price will
result in a large increase in sales volume. (e.g. When the international
phone market was first opened up to competition, small decreases
in price from the old very high regulated prices saw large increases
in the volume of calls that more than offset the cost to the companies
of the small reduction in price they gave their customers.) This
is very similar to the situation with the rubber band.
Elasticity in terms of a Customer Value model is a
bit different than this. We are often looking for linkages where
we can make a small change and know it will have a direct linear
impact on a factor like Overall price & Cost. This is half way
between the iron bar and the rubber band. If we use foresight and
come up with a new way of doing something then we have a rubber
band type relationship.
Looking at Internet Company W, and adding elasticities
to the model we looked at last month, we have :
The elasticity of 0.55 is the corresponding elasticity
for the Impact Weight of 60% for Price & Costs that we looked
at last month. Suppose we are planning some action that will lift
Relative Perceived Price & Cost by 10% to 119. The elasticity
of 0.55 means that this will impact Customer Value Added by 10%
X 0.55 = 5.5%. The new level of CVA is then 107 X 1.055 = 113. Elasticities
allow us to consider, "what if we did this" questions,
so that we know the precise impact planned changes will have on
Market Share and Customer Value Added.
Shampoo and Chocolates
I'll be spending a few days next month on a narrow
boat in the vicinity of Stratford-on-Avon. One of my challenges
has been to work out how to stay in touch with the world via e-mail.
As the boats only have a 12-volt power supply I needed some way
of powering my computer on the canal boat. After doing a bit of
searching on the web I tracked down what I needed, a tiny 230 volt
inverter just designed for notebook computers, at http://www.a2zsolutions.com/.
This store for mobile people, seems to stock a lot of nifty items
that nobody else does. Things like the EmPower power cords that
allow you to plug your computer into a power point on your airline
seat. (Air New Zealand tells me they have no plans to install the
EmPower system, but "It is one of the many innovations we have
under study". American, Delta, and Canadian already have these
power points installed.) Anyway, Brian who runs a2zsolutions, noticed
I was from New Zealand and sent me an e-mail telling me how much
he loved the place. And one of the things he loved about it was
the Timotei Cucumber and Aloe Vera Shampoo that you can buy in New
Zealand. Apparently you can't buy this in Maryland where he lives.
Well what Barbara, Brian's wife, likes about New Zealand is the
chocolate-coated slices of kiwi fruit.
Well needless to say, 3 bottles of Cucumber and Aloe
Vera shampoo, and 2 boxes of Chocolate Coated Kiwifruit slices are
on their way to Brian and Barbara, so they can recall some of the
happy times they spent in New Zealand.
Regards,
Rodger Gallagher
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