Customer Value Chain (CVC)
The Customer Value Chain (CVC) is a bit similar or analogous to
Michael Porter's Value Chain (the series of activities such as operations, logistics, and marketing that companies execute in order to create value for themselves). However it reflects the
customers' vantage point, rather than the company's. Therefore a CVC can be defined as all activities (evaluating, choosing, purchasing, and consuming) that customers perform while purchasing and using and even disposing of a product or service.
This may seem pretty straightforward. However things get more interesting when we start to talk about "decoupling".
DECOUPLING THE CUSTOMER VALUE CHAIN
Decoupling is breaking the links of the customer value chain CVC, often by a digital disruptor who performs just one or a few of these activities for the customer. Decoupling is a big thing. It is this decoupling of a consumer's value chain that has provided some firms utilizing new technology and business models the insights to disrupt incumbent firms and entire industries.
EXAMPLES OF DECOUPLING A CVC
For example, in order to drive a car, a customer would typically perform the following steps: 1. Search 2. Go to various showrooms 3. Inquire about price and features 4. Pay 5. Own 6. Drive. These steps are the steps in a customer value chain CVC that traditional car companies used to deploy. Then "ZipCar" entered the market with a new innovation. It decided to separate the activities 'owning a car' & 'driving it'. They argued that in order to drive a car, you no longer needed to 'own' a car.
Another example is Amazon who sells and delivers a new fridge but does not dispose of the old one; Birchbox provides samples of beauty products but, until recently, did not sell the full-size products; and Twitch allows people to see video games but does not allow them to buy and play those games. One more example might be Uber business model, where it has decoupled the consumer's value chain (CVC) focusing on making it easy for consumers to purchase and then utilize its "ridesharing service".
All these start-ups have decoupled the customer value chain, taking away an activity from the incumbents, and left them to fulfill all of the other activities that the customer needs.
HOW DOES DECOUPLING BENEFIT THE END CUSTOMER?
Customers not necessarily want all activities to be performed by the same large company. They sometimes prefer to hire different, specialized companies for different activities in the process. Take the example of the travel industry, were people use Trip Advisor to learn about hotel and leisure options, book activities and flights on Expedia, fly with Delta, stay with Airbnb, and use Uber to get around town. Decoupling allows customers to get the best product or service for each activity while reducing the money, time, and effort involved.
References:
Teixeira, Thales (2019), "Unlocking the Customer Value Chain", Currencybooks.com, New York.
Tom Gillpatrick (2019), "The Digital Transformation of Marketing: Impact on Marketing Practice & Markets", Economics, Vol. 7, No.2. Pp.139-156.
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