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

Wharton School
Donald E. Sexton  
Total pages
April 2009
Related Titles

Product detail

Title no longer available


Whether you're a C-level executive, a line-of-business leader, or a mid-level manager, one job ultimately matters most: maximizing shareholder value. This book systematically explains how to do it. 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.



A breakthrough approach to measuring customer value and maximizing shareholder value!


  • How to measure Customer Value Added and its components and use that information to steer your company forward.
  • How to develop winning strategies based on Customer Value Added, and structure your organization to manage it effectively.
  • Includes practical tools and worksheets for successfully understanding and managing Customer Value Added in your business.


  • 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

    Back Cover

    “Don Sexton has managed to weld key ideas from marketing, economics, finance, and statistics to explain clearly how marketing drives the financial performance of a company. Furthermore, he has given us forward control through his Customer Value Added™ metric that allows us to predict a company's future performance.”

    -JC Larreche, INSEAD Alfred H. Heineken Professor of Marketing, author of The Momentum Effect


    “Customer Value Added™ combines a discipline with an insightful approach to assessing and capturing the intrinsic value of business opportunities.”

    -Scott Fuson, Vice President, Specialty Chemicals and Global Executive Director Life Sciences, Dow Corning


    “Value Above Cost reminds us that superior financial performance must be at the heart of every decision and every action we take as business professionals. And in addition to bringing fresh insight and accompanying techniques, the Customer Value Added™ metric provides a formula with which to measure results and the tools to deliver on that responsibility.”

    -Mark Yolton, Senior Vice President, SAP


    Foreword by Bob Liodice

    President and CEO of the Association of National Advertisers


    A Breakthrough Approach to Managing and Measuring Customer Value-and Maximizing Financial Performance!


    • Establish rock-solid linkages among marketing, branding, and business performance

    • Use CVA® to structure your organization and develop winning strategies that maximize contribution

    • Contains practical tools and worksheets you can start using right now

    • Learn from the experiences contributed by senior executives from more than 30 leading organizations


    Want more revenue, contribution, and profits? Then start managing, measuring, and optimizing the most crucial driver: Customer Value Added (CVA®). In Value Above Cost, award-winning professor and top consultant Donald E. Sexton demonstrates why CVA® is such a powerful tool for quantifying customer value and the business activities that achieve it. Using CVA®, Sexton demonstrates how to systematically and incontrovertibly link your company's marketing and branding activities to business financial performance-and build a marketing accountability scoreboard that tracks your effectiveness every step of the way. Sexton draws on his experiences working with enterprises of all sizes, from startups to the Fortune 500, sharing powerful insights drawn from disciplines ranging from marketing and economics to finance and beyond. He illustrates these ideas with cases contributed by numerous successful managers. Along the way, he offers a complete blueprint for CVA® maximization: one that will be indispensable to CEOs, CMOs, CFOs, strategists, managers, and entrepreneurs alike.


    Donald E. Sexton, Ph.D., is Professor of Business at Columbia University, where for more than forty years he has taught marketing and quantitative methods and earned the Business School's Distinguished Teaching Award. His numerous articles on marketing return, marketing, and branding strategy have appeared in publications such as the Harvard Business Review, Journal of Marketing Research, and Management Science. He is often quoted in media such as The New York Times, BusinessWeek, and WCBS. Dr. Sexton is the principal of The Arrow Group, Ltd.® which has provided consulting and training to companies such as GE, IBM, Pfizer, Unilever, Citigroup, DuPont, and Verizon. He has taught at the China Europe International Business School, UC-Berkeley, INSEAD, the Indian School of Business, the Australian Graduate School of Management, Skolkovo, and the U.S. Business School in Prague. Sexton holds an M.B.A. and Ph.D. from the University of Chicago in business economics, statistics, and mathematical methods and a B.A. from Wesleyan University in mathematics and economics. His books include Marketing 101, Branding 101, and Marketing and Management Science.