Top

Measure Customer Value the Customer’s Way 

Lynn Hunsaker | Feb 17, 2009 1,589 views 2 Comments

Share on LinkedIn

Customers automatically use 50 or more metrics for any customer experience, according to author Anthony Ulwick, in his book “What Customers Want”. We may be re-inventing the wheel as we strive to come up with customer metrics that spell success. Looking at things from the customer viewpoint we’ve got to admit that customers really do know what outcomes they want.

“It’s easy to portray customers as emotional, illogical individuals who are incapable of knowing or communicating what they want”, says Ulrich. “This is a convenient way to avoid taking actions that are inconsistent with one’s own thinking, intuition and personal motivations.” Despite financial pressures to take our focus off direct inputs from customers, it’s essential to avoid the temptations of shortcuts in customer experience management, innovation and business growth. While competitors are cutting back deeply, this is the perfect opportunity to strategically grow customer value.

With a focus on outcomes from the customer perspective we’re reminded that products and services are simply means to helping customers fulfill their needs — and needs are simply customers’ desired outcomes. Our objective is to understand what jobs our target customers are trying to get done and what outcomes indicate the job is done well (customer value measures).

Apple’s iPod is an example shared by Ulrich. There were several good MP3 player brands before iPod came on the scene. It could have been a me-too product with small market share. What customers still wanted was a way to legally and affordably buy songs instead of whole albums, share music and easily create playlists. By understanding this broader desired outcome, Apple innovated the customer experience and not only outpaced its MP3 rivals but also its own core business. It pays to know what customers value as the focus for customer management, creativity and innovation.



Do you know the ultimate outcomes desired by your most profitable customers and other segments? It doesn’t have to be complicated or expensive to find out. A scan of customer service call logs will likely uncover rich opportunities to differentiate customer experience. Personal interviews with some of your high-value customers can reveal the most important outcomes that are underserved. If Apple had focused only on MP3 player product features and related customer service in its customer research, it never would have come up with a winner.

True innovation is a significant improvement along a main parameter of customer value. Unless we measure customer value the customer’s way we’ll shoot ourselves in the foot with underperforming solutions that don’t quite hit the mark. And certainly miss out on breakthrough opportunities that capture customers’ hearts and wallets.

Print Friendly, PDF & Email


Recent Editor's Picks:


Categories: BlogChief Customer OfficerCustomer AnalyticsCustomer ExperienceCustomer ProcessDigital MarketingEditor's PickVoice of Customer

1,589 views

2 Responses to Measure Customer Value the Customer’s Way

  1. Graham Hill February 21, 2009 at 5:05 pm (992 comments) #

    Hi Lynn

    Great blog post.

    Tony Ulwick’s work on understanding customer needs as the jobs they are trying to do and the outcomes they desire from doing them is a breath of fresh air to customer-driven innovation. Out with all the nebulous and unactionable Voice of the Customer definitions of customer wants, needs and expectations, and in with something simple, actionable and yet something that gets to the heart of what customers really need. Namely customers’ jobs and desired outcomes.

    I gave a 90 minute workshop a while back to hard-bitten business managers on customer-driven innovation. All had spent large amounts of money on Voice of the Customer programmes in the past and hadn’t got very far with them. They couldn’t easily action the findings from the VoC studies. The jobs and desired outcomes approach I used in the workshop had immediate resonance with them. They could readily understand their customers’ needs through jobs and desired outcomes, could identify the best innovation opportunities and could see ways to go to market. All in a simple 90 minutes exercise.

    Every now and again something comes along that is so simple yet so powerful that you think, “duh, why didn’t I think of that?”. Jobs and desired outcomes is one of these things. It is already and it will continue to revolutionise customer-driven innovation. And not just product and service innovation, but also experience, capability and even business model innovation.

    Graham Hill
    Customer-driven Innovator
    Follow me on Twitter

    Interested in Customer Driven Innovation? Join the Customer Driven Innovation groups on LinkedIn or Facebook to learn more.

  2. John Todor February 23, 2009 at 5:24 pm (199 comments) #

    Lynn,

    I am in complete agreement with the concept of the outcome driven perspective. My argument has been that in an era of abundance and choice, customers experience value in the experience or consumption phase, not the purchase. Sadly, most companies still think in transactional economic terms.

    Just to embellish your reference to the iPod. In 1998 Diamond Multimedia introduced the Rio and in 2000 Best Data introduced the Cabo64. Both were potable and stylish music players. While both worked technically, both failed as products.

    Apple understood that no one was asking for an iPod but they did believe there was a latent desire. If you recall their early ad and billboard, they were silhouettes of people swaying with the music — with an iPod on their head. Apple realized that to unleash the desire, they needed to reach people emotionally. Desire grew and so did demand. In 3 years the iPod became a $10 billion product.

    John

    John I. Todor, Ph.D.

Add Your Comment (All comments are reviewed by moderator, no spam permitted!)