The NTF Group's approach to Customer Value Management (CVM) is about measuring, managing and enhancing long-term customer value. Value based segmentation lies at the heart of the CVM process.

Why Customer Value Measurement?

• To reduce customer acquisition costs

• Because of the heavily skewed nature of customer profitability (90 /10 rule)

• To understand and manage the economics of customer retention and thereby reduce defection

• To re-engineer customer management and service delivery

ERA1	ERA2	ERA3
Understand current value Transfer prices Unit marginal costs	Inherent Customer Valuation Understand value of Customer to the total industry A share of wallet measures for individual customer	Best Practice CVM Understand the long term value of customers Likely uptake of future products and services

Although most companies have made an attempt at understanding the current value of their customer base, many are yet to understand the value of those customers to the industry as a whole or their value over time.

Valuation methodology: the total industry profitability view

	Profit currently being delivered to business. This can be measured directly.
	Profit currently being delivered by customers to other service providers. From a business development viewpoint, this represents the "low hanging fruit". Can only be derived using statistical models.

Measuring external profitability usually requires primary research and predictive modelling. To learn more about our methodologies, please contact us.