Customer relationship value and profitability assessment in B2B relationships : Creation of partnership performance assessment process
Wikberg, Toni (2016)
Wikberg, Toni
Metropolia Ammattikorkeakoulu
2016
All rights reserved
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2016111416160
https://urn.fi/URN:NBN:fi:amk-2016111416160
Tiivistelmä
In partnership-based business the value of the relationships between the supplier and its customers is the essence of the high performance. The functions of both parties needs to be developed constantly to achieve profitable and valuable relationships. The relationship value depends on variety of parameters, such as, trust and satisfaction that increases commitment which yield into profitability. Hence, it is clear that modern organizations with partnerships cannot rely only on marketing based on the classic 4Ps. Companies need to start viewing themselves as customer-centric organizations and add the 3Rs, i.e. retention, referral and repurchase, into their marketing schemes to build the commitment of their customers.
This thesis presents the development of partnership performance assessment process (PPA) that relies on two distinguished dimension of customer relationship value. The First dimension is the internal value dimension, which is representing the case company aspect of relationship profitability, and the second is the external value dimension. The external value dimension is representing the satisfaction and commitment of the customers. The process relies on recurrent cycles of assessing the internal value dimension and measuring the external value dimension. These two dimensions form a portfolio canvas that divides the customers into distinct portfolios. The Portfolio Canvas is a representation of the relationship value of the individual customers.
The process was developed based on a theoretical framework with three main topics, namely, the customer centricity, activity based costing (ABC) and customer perceived value (CPV). The CPV is translated into satisfaction and commitment through concepts of satisfaction–profit chain and service-profit chain. The ABC system was implemented into the case company CRM system to assess the customer profitability and the customer perceived value was measured with a satisfaction and commitment survey. Using the results of both the CPV and the CPA tool, the customers were placed into distinct portfolios.
The proposed model for PPA was tested using the data currently collected in the CRM system and by surveying the customer base. The results were analysed and benchmark values were validated. The results were indicating the potential of the PPA process in making fact-based and intelligent conclusions. These conclusions can be used to develop the individual relationships with the customers. Moreover, the process itself drives the change of the organization towards customer centricity.
This thesis presents the development of partnership performance assessment process (PPA) that relies on two distinguished dimension of customer relationship value. The First dimension is the internal value dimension, which is representing the case company aspect of relationship profitability, and the second is the external value dimension. The external value dimension is representing the satisfaction and commitment of the customers. The process relies on recurrent cycles of assessing the internal value dimension and measuring the external value dimension. These two dimensions form a portfolio canvas that divides the customers into distinct portfolios. The Portfolio Canvas is a representation of the relationship value of the individual customers.
The process was developed based on a theoretical framework with three main topics, namely, the customer centricity, activity based costing (ABC) and customer perceived value (CPV). The CPV is translated into satisfaction and commitment through concepts of satisfaction–profit chain and service-profit chain. The ABC system was implemented into the case company CRM system to assess the customer profitability and the customer perceived value was measured with a satisfaction and commitment survey. Using the results of both the CPV and the CPA tool, the customers were placed into distinct portfolios.
The proposed model for PPA was tested using the data currently collected in the CRM system and by surveying the customer base. The results were analysed and benchmark values were validated. The results were indicating the potential of the PPA process in making fact-based and intelligent conclusions. These conclusions can be used to develop the individual relationships with the customers. Moreover, the process itself drives the change of the organization towards customer centricity.