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Value Above Cost: Driving Superior Financial Performance with CVA, the Most Important Metric You've Never Used

By Donald E. Sexton

Published by FT Press

Published Date: Apr 6, 2009


This book systematically explains how to maximize shareholder value. Columbia University's Don Sexton fully identifies the real drivers of shareholder value, unifying key concepts from marketing, branding, economics, management, finance, accounting, and statistics. Sexton introduces a powerful new metric: Customer Value Added (CVA), the difference between customer-perceived value and variable cost per unit. Next, he demonstrates CVA at work, presents research and case studies that prove its value, and shows how to use it to consistently measure, manage, and optimize profit, cash flow, and shareholder value. Readers will learn why CVA works; how to measure it; how changes in CVA correlate to changes in profits and cash flow; and how to use CVA to steer the enterprise. Along the way, Sexton illuminates CVA's key implications for managers, including why managers must focus attention simultaneously on both customers and costs, and why well-publicized "generic strategies" such as "net recommend" offer only part of the solution. Finally, drawing on his own extensive experience consulting on CVA and related issues, Sexton presents easy-to-use worksheets for translating CVA concepts into reality in your own organization.

Table of Contents

Foreword     xviii

Acknowledgments    xx

About the Author     xxi

Chapter 1: Marketing and Financial Performance     1

Chapter 2: How CVA® Affects Financial Performance    33

Chapter 3: CVA® over Time    65

Chapter 4: Perceived Value    89

Chapter 5: Costs    127

Chapter 6: Managing CVA®    151

Chapter 7: Managing CVA® over Time    181

Chapter 8: Utilizing CVA® for Strategic Decisions     211

Chapter 9: Utilizing CVA® for Marketing Program Decisions    247

Chapter 10: Building the Marketing Accountability Scorecard     275

Chapter 11: Organizing to Manage CVA®    293

Endnotes     311

Index    329