The customer value chain focuses on creating value for the end-user, while the supply chain focuses on cost. Analyzing the customer value chain involves identifying steps that contribute to customer satisfaction and improving them. Companies can also focus on steps between the finished product and the customer to retain existing customers.
A customer value chain is a business concept that represents value creation for a customer. It is similar to the supply chain, which traces the various stages of production and supply of raw materials to the sale of the final good to the end user. The big difference is that while a supply chain often measures cost, the customer value chain is all about end-user value add-on. Another interpretation of this value chain places emphasis on the measures taken to retain existing customers.
An example of the difference between a simple supply chain analysis and a customer value chain is the delivery of a bed. From a purely supply chain perspective, delivery is a relatively small factor – it doesn’t make any tangible changes to the bed itself, and for a large company with its own delivery network, costs are relatively low. From the customer’s perspective, however, the delivery value is high. Most customers do not have the ability to transport a bed and without a delivery service; they would be left to choose whether the bed was useless to them, spending the time renting a self-driving van or paying a hefty fee to have the bed picked up and transported by a third-party company.
Analyzing the customer value chain involves breaking down each step that contributes to ultimate customer satisfaction. A company can use this analysis to identify all impacts when its activities contribute to that satisfaction. The company can therefore improve its position in two ways: by improving existing incidences to create better satisfaction and by finding new incidences in which it could play a contributing role. For example, a manufacturer might acquire a raw material supplier or distributor in order to extend its presence in the value chain. It could also refine its manufacturing process to improve the quality of the goods.
Another response to the customer value chain is to focus on the steps between the finished product and the customer. This tactic is designed to make the most of existing customers rather than focusing on marketing to win new customers. Examples of such steps include building good customer relationships, such as through after-sales service and support, and offering discounts for repeat customers. Such activity may even lead to existing customers recommending the product and manufacturer to friends and colleagues.
Protect your devices with Threat Protection by NordVPN
