Value adding ratio.

Articulating a Customer Value Proposition, understanding which activities add value to the customer, and which do not,  is core to any successful marketing activity. However, so many CVP’s  I see are a bunch of words dreamt up over a beer, and have little to do with how a customer interacts with, uses, and values a product 0r service.

There is a relatively simple way to measure a CVP, a ratio of the Money spent that adds customer value, divided by total money spent, a CVP ratio!  I am indebted to Bill Waddell for the idea, and like most great ideas, it is simple.

The notion of waste is a foundation to Lean thinking but can get tangled up in the definition of what activities are necessary to run an enterprise, but do not add value to the customer, and those that are just waste.  However, having made the distinction, and done a bit of customer research, you can now put a number on the value added, and track it over time.

Should keep the accountants and MBA holders happy, and unlike many measures those numerator driven types grasp, will add value.

About strategyaudit

StrategyAudit is a boutique strategy and marketing consultancy concentrating on the challenges of the medium sized manufacturing businesses that make up the backbone of our economy. The particular focus is on their strategic and marketing development. as well as the business and operational efficiency improvements necessary for day to day commercial survival. We not only give advice, we go down "into the weeds" to ensure and enable implementation.
This entry was posted in Customers, Lean, Operations and tagged , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s