I asked my connections on LinkedIn the following question:
What is Customer Value? Do we really have a clear understanding of it? How do we understand what value we are creating for our customers? Is it really important to know or its just a waste of time to spend knowing customer value?
I have received many answers from many different experts - I really appreciate and thank you all. Posted below are the answers and specific names (some I personally have met some I know only through linkedIn)
Navneet, I would point you to a book "Know Your Customer: New Approaches to Understanding Customer Value and Satisfaction" by Robert B. Woodruff, Sarah F. Gardial I am sure this book will be the best and complete answer to your question. Regards, Bhanu Kiran Potta
Understanding it is definitely a challenge but one worth taking on. Understanding customer value, by product/market/geographic segment is the first step in understanding the value proposition that must be delivered. This, in turn, is key to designing a segment by segment value stream which includes only value adding activities produced by the lowest cost internal or external provider. If the customer doesn't value the attributes added by a value stream element, get rid of them. In addition, don't be afraid to seek out the lowest cost source for each necessary element. Web 2.0 and connectivity have made it easier than ever to trade high cost internal functions for lower cost external specialists. Next, dettermine which value streams you can combine because they are similar enough and which ought to be disregarded because they serve only an unattractive segment.
Right articulation, communication and understanding of customer value is often a chalenge. It requires one to get into the context, semantics, and sometimes even specific experiences of individual to interpret it. This has and will continue to be a challenge for all and in the realm of art than a science. Our understanding sometimes can get impaired by our own context, semantics and experiences. The wider the experiences an individual/organization has the brighter are the changes of one understanding the context/semantics and the value itself. Understanding or articulating customer value will be the key that would make a difference between a job well-done and also-done. So definitely not a waste of time, I suppose. Having said that I'm more interested in reading the book referred by Navneet to understand how well it reflects the crystallization of the theory that I hold in my mind based on practical experiences.
It is only a waste of time if your intuition is as accurate as hindsight. Sure it takes time and effort to get inside the customer's head, and it can certainly be a pandora's box. However from a risk management point of view it significantly reduces the odds of costly guess-based failures Guesses are great when they work out fine, and then you ask yourself why you need to bother with the rigours of research and analysis. However the reminder comes along with every costly intuition led mistake
Hi Navneet, The paramount value of each customer is vital to the growth and stability of any corporation. If a customer becomes disgruntled, studies indicate the average customer will express displeasure to a minimum of six individuals. Each customer becomes an invaluable linkage to future customers because the same tendency applies to share positive customer service experiences with one's associates. One of the challenges of customer value is a hybrid understanding of three critical questions that contribute to overall customer satisfaction: 1) How do I design product X to offer more and better features than the competition? 2) How do I market product X to increase marketability share in the era of globalization and international competition for market share of competing products? 3) How do I offer impeccable customer service after the sale of product X that will provide each customer with immediate resolution of service-related issues? Each of the three questions can become a work in progress and pose continual challenges to decision makers who are responsible for the product from conceptualization phases to the post sale process. In essence, these questions are strategic objectives and important to never lose focus over because globalization has increased the competitive nature in several business sectors to produce quality results with an emphasis on being responsive to the individual needs of each customer. Thank you for being a valued member of our online community and for using LinkedIn! Rob LinkedIn, Customer Support
George Anderson, MSW, BCD, CEAP
I provide Executive Coaching/Anger Management for Physicians. I use a Pre and Post test. Therefore, I am able to see the results of the services which I offer. I also receive positive feedback from those who gain from our interaction. George Anderson, MSW, BCD, CAMF
Customer Value refers to features of your product seen as worthwile by specific groups of people/companies (this would be my pragmatic understanding of the concept). To find out what value we create for our customers we need to ask them what they value :) and then ask again if we deliver...and to do so continuously, because for some reason they tend to continuously change their opinions...:)) Seriously, not taking time to find out what is it they want from you and whether you delive may cost you the business, the profit, not to mention a lot of frustration at the hard times you have getting & keeping your client portfolio...so the time spent on this saves time & money later...
Krishnan G. S.
It is the value for money as experienced by the customer in the product/service used by him. Clear understanding - No. Creating value - by sensing the experience that the customer undergoes. It can be a waste of time if ladder is parked on the wrong wall.
It is 10 times more expensive to sign a new customer than it is to retain an existing one. I guess that should be enough reason to offer more to customers in terms of utility, quality and cost effectiveness (all of which constitute value). Any product or service though objectified based on parameters defined by the market, has to be subjective in terms of the though process that goes into developing or delivering it. So it is value and only value (value for money) that will motivate the customer to give his/her/their business to us. I guess this answers the part about what and why.... To determine how we can measure value is again to see the gap between expected and achieved (be it sales, new leads, repeat business or all combined). The results should serve as a clear indication of where the lapses are. Customer Satisfaction Surveys also give a clear picture and pin point the areas of improvement. So unless the individual has exclusive marketing rights (like a patent - which in itself does not guarantee that the product will sell)...i guess a lot of time and effort should be devoted to knowing what the expectations of the customer are and managing them effectively. There is one adage that i try to go by... "Commit Less, Deliver more"
Excellent question! Customer value ultimately positions your product in the market place. But, while your product features address various aspects of customer need profile, it is never the same for any two customers. Drivers for these needs have different priorities and values for the customer - thus the final value of the product varies in terms of purchase decisions. Putting aside a little bit of time to analyze this reveals wealth of useful information for marketing your product, and discovering not only the correct market segments, but also helps in setting up positive product arguments for them. But then again, you should know what you're doing, and be able to characterize your product in terms of which needs - requirements - does it solve. Connecting these needs/requirements with your actual design&development actions ultimately reveals meaningfulness of your product. A true waste of time might be to develop this product if it does not address anything making sense on the market place...
Hi Navneet, You have raised a very valid point. My take on this is that customer value is very unique to a particular customer at a given point in time. For instance, if I were a customer, the value that I perceive of a given service will be determined by the extent to which it satisfies my immediate priorities whether it be cost, quality, or something more. However, just because it is dynamic or complex one cannot ignore the same as that is what will make your customer come back to you everytime. It makes more sense to try and unravel the mystery around customer value for long-term customers who give you huge business. Probably, the answer to the question - 'why they continue to give you huge and continued business?' lies in hidden value experienced by the customer! It will be very interesting to hear the view points of the more experienced folks in the marketing/sales roles.
Navneet, Very valid question, which need to be revisited again and again. What is Customer Value? Customer wants to retain the business relationships so that his value goes up. Do we really have a clear understanding of it? We should have a clear understanding of customer business to do that we to deep drive in his business. How do we understand what value we are creating for our customers? Substantial and perceived value will be visible and that will take the relationship to next level in shape of new business. Is it really important to know or it’s just a waste of time to spend knowing customer value?>>> It is very important to know the custom which are being followed to create any Value.
Customer value is everything and it is the core of all businesses. If companies dont have that understanding then they will struggle year after year. Knowing what a company wants and selling it products or services that can be delivered as promised is vital to biz success. Then continue to add value with value adds that are truly benefitial without the customer requesting u do certain things. Pro active versus re active brgds mark
Terri L Maurer
It seems that value is an individual perception and not one that can be easily defined. Just as 'beauty is in the eye of the beholder', you could say that 'value is in the heart and mind of each individual customer'. Take Wal-Mart, for instance. Some people shop there because they value the low pricing. Others like the vast selection. Still others value the late retail hours, or being able to do all their shopping, including food, in a one-stop location. Trying to pin 'value' down to one or two concepts would be very difficult.
I think we should start answering this first, "Who are my customers", before identifying the value. In today's world, the definition of customer is contextual considering from the “time & space” perspective. My customer I worked yesterday could have become a vendor today, and I have no idea about tomorrow!. So, the definition of customer value should perhaps need a time associated with it. Going beyond the word "Customer", I would like to call the "stake holders" based on the line of thinking mentioned above. The “situational value” we are creating for our stake holders are measurable in the form of impact.
Customer value - we talk about upping services all the time. That is not what I think. For me it is something that is translating to quantitative measures. If you say you have a value proposition of bringing state-of-the-art technologies to deliver to the customer, unless you relate to the following, it becomes baseless a) The customer Hot buttons - immediate pain areas b) The customer issues - general issues c) The motivators - what is motivating him to implement this in his org. You must answer each of them with the customer in context and then give the customer the value proposition around these aspects. Only then you will see the Customer Value emanate from the solution being suggested. PRICE IS NOT THE ONLY CRITERIA R Deena
Easiest practical way to achieve this from my past experience is to prototype the idea in a customer centric way, it may simple sequence diagrams, animated viewlets or even a prototype implemented on a branched version of the solution. Then take it from there by planning it and cost into the release cycle.
Sridhar Chakravarthi Mulakaluri
Dear Navneet, Customer value- value perception of our product/service from clients perspective How do we understand it? - By treating each client as unique and engaging them in a dialogue and understanindg their unique needs Importance- with out undrstanding this, no sales, no pricing, no profits and no business. This is the only way to escape comoditization. Best regards, Sridhar