The Levels of CVA

Organizations usually embark on customer satisfaction measurement programs in stages.

The following graphic lays out the five levels of CVA measurement:

In Level 1, organizations are driven by conformance: they simply look to determine whether or not they are meeting basic customer needs.  Usually in Level 1 measurement there is little empirical or critical analysis to determine what to measure. Instead, organizations want to get a fundamental understanding of whether or not they are meeting customer expectations and therefore generally measure what they collectively believe is important to customers. Consequently, measurement in Level 1 in focused on the organization’s needs, not the customers. Often, the Level 1 effort is driven by a need to eliminate redundancies or unnecessary procedures or processes.

In Level 2, organizations seek to get deeper into the hearts and minds of customers by understanding their needs and wants. At this level, what is measured is driven by what customers say and demonstrate is important in their choices to purchase from the organization.  Instead of being management-driven as in Level 1, measurement in Level 2 is customer-driven.

Level 2 is what many organizations currently deploy as customer satisfaction measurement.

In Level 3, organizations shift their focus solely from their customers and the organization’s processes to an industry level (or another competitive comparison as appropriate such as geographical reach or the like). Now the organization seeks to understand how their customers perceive their performance in comparison to competitors or potential competitors. Critically, at this level of CVA measurement, an organization measures both its customers and competitors’ customers. Relative Market Position (RMP) becomes the critical analytic insight.

Also in Level 3, an organization measures win/loss in addition to customer satisfaction. Understanding why customers choose one organization versus another (or set of others) and why customers defect for a competitor become critical inputs to using a CVA program to drive internal change.

In Level 4, organizations develop the tools to implement change based on customer requirements and specifications. Tracking RMP across critical variables as defined by customers is essential at this Level. In addition, organizations test various macro-variables (overall satisfaction, willingness to re-purchase, willingness to recommend, top-of-mind, etc.) for their relevance to explaining changes in critical variables.

Moreover at Level 4, organizations start to model the relationship between customer variables and market share, revenue and other relevant internal measures.

Finally, in Level 4, organizations begin to align internal process metrics with customer metrics to ensure that internal metrics are relevant to customers and that all customer-facing or customer-impacting processes are being measured and are being measured in ways that are relevant to customers.

The overall objective at Level 4 is to drive an increase in market share or customer value or other critical performance metric.

Level 5 is rarified space. In Level 5, organizations develop and link both employee value and shareholder value measures and link them with customer value.

Performance at Level 5 means a sustained value-based organization that is focused on long-term value development, performance, and profitability.