John Todor’s post on Do Customers Care About Your Green-ness? got me thinking about how customers think about value. His suggestion that value is more than just the economist’s dry ‘utility’ is obviously right.
Customer perceptions of value can be broken down into a number of components such as utility (does the product do what you want it to do), feelings (do I feel good about using the product), sociality (does the product support social contacts), etc. Each of these can be measured at key touchpoints during the product and customer lifecycle. The value of the end-to-end experience is thus some kind of Bayesian-updated weighted average of value at the individual touchpoints.
This has a number of implications. Firstly, companies need to understand how customers perceive value. Most companies still use hard-to-action concepts like needs, wants and expectations to understand customers, rather than look at the jobs they are trying to do. The result is that insights about customers go unactioned. Tony Ulwick & Chris Lawer’s work on the jobs people are trying to do provides a pragmatic framework to understand this from the customer’s perspective.
Secondly, companies need to bundle products, services and experiences in a way that helps customers to do their most important jobs. Most companies offering ‘solutions’ base them on how they want to bundle products and associated services, not on how customers want them bundled. The result is that customers have to go to the trouble of mashing-up their own solutions and resent paying for bundle components they don’t want. Sundar Bharadwaj’s work on customer-oriented solutions provides the best framework here.
And finally, companies need to understand what capabilities they need to develop to hear the inner voice of the customer, to respond with the right solutions and to deliver them cost effectively. Chris Lawer’s on-going work on capability models for customer co-creation will provide a robust way to look at what companies need to do to make this work. And Toyota’s lean thinking further developed by Womack & Jones into customer-pulled lean consumption already provides the best framework for implementing the capabilities.
There is obviously a lot of work left to do. But as John quite rightly points out, customer perceived value as a balance to customer lifetime value is going to be increasingly important in these times of abundance.
What do you think? Are customer perceptions of value important? Or should customers be heppy with what they get?
Post a comment and get the conversation going.
Independent CRM Consultant
Interim CRM Manager