What are the benefits and limits of conducting Relative Customer
Value(RCV) research? Under what condition should this method be
employed?

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Clarification of Question by jackieyu-ga on 27 Oct 2002 17:58 PST

By sayig "under what condition should this method be employed", I mean
how to do it, i.e. what is the plan of action for managing customer in
conducting this research.

Jackieyu --

This is a great question because it pertains to a lively area of
strategy and marketing analysis.

Relative Customer Value (RCV), sometimes also called "Customer Value
Management" (CVM),  is based on the principles that:
* customers buy on value
* value = quality (relative to price)
* quality encompasses all attributes outside of price, including :
* reliability
* customer service
* brand equity
* product performance
* competitors are ranked by customers on a scale 

Critical to accurate research is determining what 3-5 attributes are
most-important to customers; how customers value those attributes; and
how the company ranks versus competitors.  Offering better value
allows a company to gain market share, increase profitability -- or
both.

An excellent introductory piece is this presentation by Bradley Gale,
" Measuring and Improving
Customer Value," (undated):
http://www.cval.com/Gale/ISBM.RTF

Gale's book, "Managing Customer Value: Creating Quality and Service
that Customers Can See", Simon & Schuster, 1994, is one of the early
works on RCV.

Where can the RCV analysis go wrong?  Just about any place imaginable:
*  surveys of buyers, as opposed to key decision-makers
*  failure to properly assess competitors attributes
*  choice of the wrong attributes
*  incorrect measures of the value to customers

I saw your clarification after preparing most of this answer.  But I
think that the American Productivity Center Report done by Gale and
four others on best-practices is a road map on how to do it.  The
report on customer-value management is called ""Using What Customers
Value to Guide Your Business" (2000):
http://www.apqc.org/pubs/summaries/CMCUSTVALUE.pdf

The report describes how best to do it.  I've cited its advice here in
ways in which RCV can fall apart:
1.	lack of top-level support
2.	no strategic commitment
3.	assets not allocated to perform where customers see highest value
4.	lack of integration into all phases of planning, budgeting
5.	employees not involved at all levels
6.	no common language for attacking RCV issues
7.	prioritization not done
8.	focus can remain on product or channel -- as opposed to a
solution-focus

For additional reading there is an excellent series of journal
articles cited at the Customer Value Management "Resources" page:
http://www.cvm.co.nz/6_resources/journalarticles.html

If any of this is unclear, please request a clarification before
rating this answer!

Best regards,

Omnivorous-GA

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Clarification of Answer by omnivorous-ga on 27 Oct 2002 18:31 PST

Oh, and I forgot to include the Google search strategy, should you
wish to read additional articles about the background of RCV:
"relative customer value" + marketing
"customer value management" 

Best regards,

Omnivorous-GA