Abstract

Authors: Giulio Bruttini, Fabio Fedel

During tough economic times many companies react to falling orders and lower margins cutting back on marketing expenses and reducing customer care and service. Our surveys show that when times are tough, customers pay more attention to the way they are treated and to the experience they make in their interaction with various companies. Today, more than ever, the customer remains the main issue when seeking economic opportunities. Customer satisfaction and loyalty should therefore keynote company’s long-term strategy: satisfied and loyal customers were, are and will always be the core of the economic and competitive success of any company in the long run. Ultimately, customer choices largely determine the company’s value of cash flow, the timing and risk profile, thus  the company’s capital.

Customer orientation represents the model any organization should aim to. The function of Marketing, called to make this orientation effectively operating, should manage the customer-company cycle starting from the introduction of Customer Satisfaction Listening Systems. Many companies have already implemented these tools, thus monitoring carefully customer satisfaction and filling the gap as far as satisfaction expanding the relation with their customers. Evidence shows that it is easier to maintain a loyal customer than acquiring a new one. Though the importance of customer relationship, the effects of customer loyalty on churn rate and on total value of a customer (TVC) and customer lifetime value management are all proven concepts, most companies have not directly applied them yet.

Further sophistication is provided by understanding that “customers are not equal” and that, if properly managed, price lever can allow to exctract extra-value from any customer. An issue poorly managed in companies is, in fact, that of transformation of the available  information on satisfaction in tailored pricing strategy for corporate profitability, a fundamental prerogative  to ensure customer satisfaction in the long run.

We believe that the balance between the value produced by the company – value given – and the value actually taken from the market in form of economic profit - value taken – should become the subject of constant and deep reflection in the company. Our research shows that companies that invest significant resources in exctracting value from strategic pricing get better long-term results than those that focus primarily on the give. Companies have to develop a pricing process to achieve a lasting change in their pricing policy. The pricing process features all decisions and actions of people inside the company/unit that influence the selling price. To be effective, this process requires the introduction of a specific organizational profile, the Value Pricing Officer, whose purpose is to be a point of reference for the different business functions and to facilitate optimal pricing policy. 

In this framework, Customer Value Strategy provides and overview which includes the value created for customer, the wide relationships developed with the same, optimal pricing and enterprise value from shareholder perspective.

This Paper aims at explaining how, though listening of satisfaction and committment to maximize customer loyalty provide an essential input, they are not sufficient to generate high and sustainable profitability performance.

It is therefore necessary to rethink the pricing process in order to identify “pockets of value” for the customer as far as product attributes, service and brand which are currently desired by the customer, but wich can be enhanced through better management of price lever without triggerring customer dissatisfaction or abandonment.

Author: Luca Vella

Executive Summary

The primary goal of each company is to maximize Shareholder Value. 

One of the available levers to meet this goal focuses on consumer value increase and control of expenses by increasing revenues and assessing the effect eventually produced by actions taken to improve the relationship process involved in Customer satisfaction. 

A main aspect affecting company’s results is, in fact, customer continuity of purchase: if customer experience is positive that will keep customer purchasing and increase purchases.

But more important, customer experience with your business should be far more satisfying than the experience provided by competitors.

An excellent relationship represents a lever to create and defend the competitive advantage over key competitors over time.

However, although you can better manage an issue only if you size it and perfectly understand what determined it, many companies haven’t yet developed a system to effectively and reliably measure the degree of Customer satisfaction and even fewer are able to understand and survey the reasons for such satisfaction.

This gap is partly due to the fact that companies ignored the revolution that has deeply affected “competition” in recent years, i.e. emphasize the Relational (know how to deal with your customer, “Quality of Service”) and  “Experiential” aspects (ability to maintain the Customer – “Quality of Experience”) instead of the traditional Transactional issue (ability to gain a new customer “Product Characteristics”).

But even enterprises that realize the importance of assessing the quality of experience fail to translate it into a structured systems of inquiry capable of supporting the decision making process.

Customer Satisfaction surveying and monitoring shows therefore a gap as far as methodology and processing.

To cover this gap, the following three steps need special attention: 

1. The logic of Surveying and Measurement: designing and management of an effective Customer Listening system that holds in high regard (getting started with the survey questionnaires) key aspects related to Product, Service, Brand and Purchase Experience as well as use of Product/Services according to a differentiated approach. 

2. The logic of how to Read and Understand the results: Designing of a System that, moving from Customers’ evaluations and suggestions, is able to synthesize evidences and management directions to support the decision-making process. To best achieve this, internal structured mechanisms (“Interfunctional Roundtables”) to evaluate and assess evidences properly are needed.

3. The logic of Action: launch of actions that provide sustainable higher Customer Value. This requires, besides development of above-mentioned items, availability to tailored Pricing models. 

The above-mentioned three actions/phases can be realized if they refer to a System for assessing “Contact phase” between the Customer and the Company. These Systems, that have yet not been widespread, support Analysis of Customer Satisfaction, but most of all, represent a key aspect in Control Systems for assessing effectiveness of Multichannel Strategies, hence strategies which represent a priority action across many different industry sectors.

Authors: Fabio Fedel, Michela Visciola

Abstract

"Growth" is a primary imperative for the survival of the enterprise. This is particularly true today as advances in technology require continuous innovation of sectors and markets.
Despite the strategic importance and relevance of this issue, the approach till now has not always been proactive and structured, for the following two main reasons:

1) Management uses "outdated taxonomies" to outline and design enterprise growth strategy;

2) Companies retain corporate cultures that have proved to be unbalanced either as far as Business / Production or as far as Finance.

The approaches and methodologies based on Economic Profit metrics that we reread from a financial and Business / Production viewpoint, allow traditional growth options to evolve to levers that combine the goal of growth with the objective of creation / maximization of enterprise value as well as integration of the economic-financial language with the world connected to the needs and the value perceived by customers.
Three "drivers" can be used to plan and relaunch enterprise growth in the long-term:

a) "The Quest for Value": investing resources in markets / sectors featuring high expectations of future growth as well as increasing value for shareholders;

b) Search for "Blue Ocean": beat competitors and gain market shares by continuously analyzing the Utility Curves of own customers and by setting out the functions of use to be met;

c) Selective Investments and Divestments: gaining market shares through Merger & Acquisition operations correctly estimating achievable synergies and avoiding typical errors involved in transactions set to EBITDA multiples or arising from simple growth ambitions.