A CVA® orientation is about balancing perceived customer value and costs. Because CVA® is the difference between perceived value per unit and cost per unit, it rewards those organizations that can measure, monitor, and manage both customer value and costs.
How many people in the typical organization measure, monitor, and manage costs? Usually a lot of people. How many people in the typical organization measure, monitor, and manage customer value? All too frequently, very few.
- How many people in the typical organization measure, monitor, and manage customer value?
There are some organizations that are proficient at evaluating customer value, and managers from many of those organizations have provided sidebars for this book. Often, however, when the author addresses audiences on the topic of marketing accountability and asks how many people know the perceived value for their products or services, very few raise their hands. A follow-up question concerns how many of the attendees know about some of the techniques for measuring perceived value—and again very few raise their hands. The CVA® orientation forces managers to look at customer value and costs and then rewards them for their efforts with strategies that are more effective in achieving desired financial goals. Gordon Bethune dramatically raised the performance of Continental Airlines by examining the implications of all decisions on both customer value and cost. For example, before the Bethune takeover, pilots were given bonuses for using less fuel—which they accomplished by going more slowly resulting in missed connections for Continental passengers. The pilot incentives constituted a classic example of single-minded thinking, lowering costs without regard to the impact on CVA®—an attitude that Bethune completely changed with dramatic results.27