Become a Customer Expert! Start by Clearing 9 Misconceptions About Customer Value


Share on LinkedIn

Many of you are Customer experts, or close to being one. It is a matter of using what you have learnt, and what you keep on learning. If you are open to new ideas and learn better techniques, you will be a better Customer expert!

For being a Customer Expert, first convert to being a Customer Advocate. Embark on a Customer-Centricity and Customer value journey. Really understand what each of the Customer terms mean and what their limitations are. For example, what are the limitations of Customer satisfaction, Customer journey, or Customer experience?

Once you really understand the limitations, you must create value for yourself and your company by leading them to use the best possible techniques. Do not get swayed by how we compare ourselves vs. the past. We have always said comparing yourself with yourself does not tell you whether you have improved in the marketplace unless you have competitive data. Moreover Customer Satisfaction does not always relate to business results. Lastly, we know customer experience is measured by Customer satisfaction, which does not allow us to get enough data. NPS is an incomplete measure.

Why use also ran measures? Why not go to better data such as Customer Value data endorsed by Philip Kotler, suggested by Peter Drucker, endorsed by Jag Sheth, Don Peppers and others.

The first step in your using Total CVM is to get rid of misconceptions. Some are listed below:

Clearing Misconceptions on Customer Value

Here are some common ideas posted in blogs, and what is factually correct. The word Value is often misused and misunderstood. You can relate to some of these. These may help you in business or as a buyer.

1. Everyone has their favourite term to deal with Customers

People hone in on one Customer term or the other, because their company uses it, or because they read about it, or because it is fashionable to use. Many users of these methods do not delve deeper to understand the real meaning, its actual usage, and whether it relates to Customer buying or business results. Some of these terms are Customer Experience, Customer Goodwill, Customer Intimacy, Customer Relationship Management (CRM), Customer Response, and Customer Satisfaction, Customer Journey and so on.

Customer Experience is often used and is a good thought. It is one major aspect of Customer Value. It is often used as the experience with your company but not as a competitive measure. It is not strong on the cost of doing business (price and non-price). It misses many points of doing business which includes items you may not experience. A retailer may do business with your company because of future business potential of which you have no experience; or what you feel about the future of a company with whom you have no experience and you wish to buy. Is it the experience or the memory of the experience that is important? Of the user or the decision maker?

In the case of CRM, while a good concept, does not really work on the relationship but on the data base of Customers. Not much business good has come of it. It is as important as getting good Customer data and insight.

Total Customer Value goes far beyond all these in giving you a picture of why people buy and its correlation with business results, the competitive profiles you can build and use to better your competitive strategies, get prioritisation of, and what is important in the Customer’s buying motives and buying behaviour. You can understand competition better and why some Customers buy from you and why others buy from your competitors. You can understand how to create value, which might mean better experience, better goodwill, better loyalty, better retention, higher market share and profits, better pricing, decommoditisation.

Next, Total Customer Value helps begin a top down approach on Value Creation through a Customer strategy and mind-set changes, and we have pointed out how this happens or can be made to happen particularly by using Customer-Centric Circles. This is a bottom up approach. Moreover, Customer Value weaves in the Bill of Rights and the Circle of Promises, and makes the front-line people more pro-active by running Continuous Customer Improvement Programs.

2. Satisfaction alone is the reason why people buy

People buy because a product or a service is worthwhile to them versus competitive products or services. Satisfaction is a necessary condition but not a sufficient condition for purchase. Sometimes, we buy even when very dissatisfied. An example could be a neighbourhood petrol station, where we had a poor experience. The convenience or the price makes us buy there.

3. High Value products have low satisfaction

This implies value is price, and that if something is high priced it has low satisfaction. This is confusing value for price. Sometimes, people pay “money for value” which means they buy high priced items. Thus if you buy a BMW, you can be very satisfied.

4. Low Value products have high satisfaction

This implies value is price, and that if something is low priced it has high satisfaction. This is just not true. It has been proved that at every price point, Customers look for Value. What does that mean: If buying a pen, whether a Mont Blanc or a Bic, the Customer is looking for Value, and buys on Value. You may be very dissatisfied with a low cost ball pen, when it streaks while writing. You will not buy it again.

5. Satisfaction measures Customer Value

Customer Value and satisfaction studies are different. Satisfaction measurements are done on transactions and generally right after the transaction by the user. Normally the top two boxes are measured. Customer Value studies are done a few weeks after the transaction and on the decision maker, not necessarily the end user, so as to get embedded perceptions. Customer Value studies are done versus competitive alternatives and are ratios. Thus a Customer Value study always compares you to competition and is not based on your score alone but their score also.

6. Value means Benefits

Value is what the Customer gets (benefits) vs. cost (price and non-price) versus competing offers. While colloquially we use Value to mean benefit or price, Customer Value is the actual worth of a product versus competing options. Value in the Customer context is not just the benefits, but what you pay versus competitive offers.

7. Values and Value are the same

Values are what someone stands for: ethics, morals, sustainability. Value is defined above. In fact, Values create Value.

8. Customer Value is newer than Customer Experience

Both are old concepts. However, the formal usage is more recent. Customer Value as a discipline started in the 1980s with Ray Kordupleski and AT&T, and CX in the 2000’s. Customer experience, Customer emotions, Brand Value are all measured by Customer Value.

9. NPS is a great measure of what the Customer perceives

NPS only answers a couple of questions on repurchase and recommendation. It does not portray what Customer thinks of the product and whether he has had a good or poor experience. NPS is better used with other Customer metrics

Why Have These Misconceptions Propagated?

My take is that most people tend to follow what they are told, rather than delving deeply into the actual meaning of, and truly understand how these concepts should be used. These concepts are used and understood loosely.

My suggestion to the Customer professional is to truly understand what each of these terms means, how they are used, and how they should be used. Reflection from one’s own experience will show what I am saying makes sense. (Remember your favourite restaurant or airline, and if you are dissatisfied, will you stop using them?)

One reason why companies and executives are not truly becoming Customer–centric is that such loosely used and understood terms confuse companies, and do not give the company true insight into what will really help. Thus just measuring NPS and stating that it tells the company what to do is misleading, and will prevent the Customer Value from truly improving (or Customer-centricity from happening).

Executives like you and Consultants can lead this change in understanding Customer Value and Customer data.

Lastly, stop being a functional Manager and become a Value creator. You will need to build your self-esteem and self-belief, and imbibe the 5As of outstanding awareness and observation, greater ability, fantastic attitude, agility and ambidextrousness. You will soon become a Value Creator.

Making Total Customer Value Management Happen

The COO renamed as the Chief Customer Value Creator: The COO (Chief Operating Officer) runs most departments impinging on the Customer. These include manufacturing, logistics, IT, marketing and HR. We want the Operations department renamed the Customer department, and COO renamed the Chief Customer Value Creator (CVCO)

The CEO becomes the Chief Value Creator: When the CEO is so renamed, his focus shifts to Value creation for the entire eco-system. His company starts to look different. A new organization chart is shown below: gm_org_future


Now that you know what Total Customer Value Management is, you have to see how to get Total CVM techniques into your company or among your cohorts. How do you undo years of incomplete measurements? How do you get rid of misunderstood terminology? If you are a functional executive, you will not make waves. If you are a Value Creating executive you will make changes. Do not be motivated by the fear of failure, but the joy of success. Do not be afraid to admit you may have used outdated measures in the past, so what?

You will have become a Customer Expert!


Please enter your comment!
Please enter your name here