June 22, 2010 10 Comments
Relationships. How do we measure the value of a relationship?
It’s not an easy question to answer.
Customer Relationships. How do we measure the value of customer relationships?
We have an answer. But I think it’s the wrong one, or at the very least an incomplete one.
If we were all in a room together, many of you likely would have shouted out words like “profitability!”, or “revenue!”. Maybe some of the more advanced thinkers would throw out “CLV!” (Customer Lifetime Value).
The problem with this lies within the root of my first question: “How do we measure the value of a relationship?”
THE MEASUREMENT OF CURRENCIES AND CAPITAL
As companies measure the value of customers, we typically only look at Dollars, or Euros, or Yen, or whatever the local currency is. We limit our evaluation and ranking of our customers to how much capital they have contributed to our organization in the denomination of monetary currency. But aren’t there other forms of capital?
You’ve heard the terms: Relational capital, Social capital, Human capital, etc.
Identifying relational value should include all the components of the value created by that relationship, but today’s CRM systems typically only include monetary measures in identifying how much a customer is worth to the company.
What about those companies or individuals who have created value for the firm by:
(1) Talking positively about them
(2) Referring potential customers
(3) Referring potential employees
(4) Providing recommendations and/or being references
(5) Introducing them to new networks
(6) Adding value in other “hard to measure” ways
There is a whole set of value being generated and given to us by not just our customers, but many members in our relationship ecosystem. The problem is that we are not measuring it. Since we are not measuring it, we don’t know what to do with it, and are likely missing opportunities to create more opportunities of value exchange.
If people are only interested in money, we call them “golddiggers”. Shouldn’t our systems enable and empower richer professional relationships than this?