Abstract

Customer-value models include the customer-value hierarchy and the net present value of customers (NPVC). These illustrate the importance of high customer value to targeting long term, sustainable, and loyal customers, who help increase profitability and shareholder returns. The customer-value hierarchy demonstrates that product or service attributes are not ends in themselves but rather means to the fulfillment of customer goals and purposes through the consequences delivered by the product or service. This can lead to customer satisfaction. At Eastman Chemical Co., interviews with major business-to-business customers revealed the links among product attributes, product consequences, and customer goals. Attributes like responsiveness and easy access can produce consequences like efficiency and savings of time and money. This, in turn, meets customer goals such as continuous improvement, lower costs, and long-term relationships. Eastman is using these data to validate its customer segmentation criteria and to revise its model of business strategy. To determine how much should be invested in greater customer value, the NPVC discounts over time the difference between revenues and expenses involved in generating customer value. The customers to be targeted for highest customer value should be those with the highest NPVC or potential NPVC. Such a strategy might require development of new core competencies.