On The Creation Of Value WITH Social CRM

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One of the fundamental flaws in thinking about value is based on the persistent logic that value is something you add, or provide. I’ll try to explain, in as simple words as possible, why and how you should think about value creation instead and what, in my humble opinion, the impact on Social CRM is or should be.

Value is not derived from your product, but created with your product

It’s persistence is shown e.g. in the way we think about value chains. It is vested thoroughly in our minds that each step in the production and delivery of goods or services is about adding value, whilst at best it is about adding knowledge, features or capabilities. None of these elements are creating value for the Customer though before they are consumed or used.

As a consequence today’s marketers continue to focus on explaining to (potential) Customers what value they are providing or adding. Firms seem not to understand that the other side of the table is not deriving value FROM the product. The other side is trying to get a job done and your product or service is a means to that end, thus they are creating value WITH the product. And – this is really important – they can’t do that job without themselves.. Indeed, themselves:

Customers can only create value for themselves WITH themselves..

If it weren’t for yourself, how would you be able to make a phone call? How would you be able to make dinner? How would you be able to enjoy it with your friends? How would you be able to use your satellite TV? How would you, well …. basically get anything done? I think you get my drift here. And although it sounds incredibly logical, this is not the logic most companies use when designing experiences or targeting new Customers.

Ignoring the Customer’s role

Most companies (their marketing departments in particular) are stuck in telling Customers what value for their money they get, based on the flawed thinking that the Customer derives value from the product itself. Yet, they are completely ignoring the Customer’s role in the process of value creation.

When they should be thinking how to further enable the Customer’s value creating capabilities, they are thinking of how to capture value from the Customer. Which in essence they ask in return prior to the value being created. (yes, most purchases are actually pre-payments). Why?

Because value only comes to life when Customers are using the product or service.

Once you understand that the Customer has an important, even decisive, role in the process of value creation, and that value is only created in use, it is not a quantum leap to the next stage: asking yourself what Customers need to do, in order to be able to create the value they are after. Asking yourself: What do they need to know, understand, be able to? (and I’m not even touching upon the contextual and emotional side of value creation here). Or taken from the opposite angle: what is hindering them? what don’t they have? what don’t they understand? what can’t they do? and how come?

Many in the area of marketing, Customer experience or even Service design, try to answer similar questions, yes. But dominantly in the context of selling goods or services (how can we make buying easier?). Too few ask themselves these questions in relation to the Customer’s experience when consuming the goods or services.

What could be, if you would truly understand?

Imagine if you would understand what “resources” Customers bring to the table to create value, beyond the product or service you provide? How powerful would that understanding be? What if you would understand that better than your Customer’s alternative suppliers? What would happen if you could support your Customers creating value in a more easy, better or quicker way, not just make them buy in a more easy, better or quicker way? Would that not provide you with the competitive advantage you want? Would that not create the advocates you want? Would that not allow you to capture higher margins over a longer Customer lifetime? I think so..

Why this is important to Social CRM?

Here’s my take on it: Lot’s of companies are starting their Social CRM efforts with listening. The first thing they do, is turning their brand new ears towards the conversation about their brand, being worried mostly about the threat of negative word of mouth. Many are also “listening” to identify influencers and analytics of social data seems to be focused mostly on understanding how messages travel, through which nodes, from which nodes and to which nodes in the social network. And it’s focused on what the sentiment is. Although I believe there is certainly value to be created for the Company in understanding all this I think it is as important that you listen to understand how your Customers create value..

Don’t wait for the feedback to come to you!

It is likely that the current chatter on Social Media does not provide you with that actionable insight. As a consequence Marketing should think about sparking conversations amongs Customers and in their social networks about their way of creating value, in order for you to have something worth listening to.. something that is worth analyzing.

Actionable insights are not only derived from good analytics, you need to understand what it is you want your Customers to talk about too, and then see if you can get them to do so.. Don’t wait for the feedback to come to you, but actively seek the feedback you need.

Once you have them talking then you can think about how integrating social data and actionable insights in your experience (platforms) and/or crm systems can help your Customer create more value with your product or service..

What is your company doing? Waiting for the conversation to take place by accident or do you have something better to do with your time? Any other applications of the above you can think of?

13 COMMENTS

  1. Hi Wim

    Greetings from Shenzhen

    An interesting post. And one that I largely agree with.

    The key idea that you brought out is that to co-create value, a number of different parties with appropriate complementary resources may need to act together act in concert. For example, one of the travel-associated jobs of ‘checking in for your flight whilst on the move’ can be done in a number of different ways with the help of other parties. The one I prefer is checking in using my mobile phone, which requires myself, the mobile handset maker’s handset, the mobile telco’s data network and the airline’s mobile internet check-in application all to act together so that I can create value by checking in with the minimum of hassle. Naturally, they all expect to create value too: the mobile handset maker through the money I have already paid for the handset, the mobile telco through the money I pay for using its data services and the airline through minimising the cost of checking-in. And then there is the intangible (but measurable) value of increased knowledge about my behaviour, my incremental retention when everything works well and the increased efficiency of airline operations too.

    We must think about all the different parties that need to bring resources together to enable the co-creation of value, not just about the customer.

    As you quite rightly point out, many, if not most of the companies looking at SocCRM, (or better still, SocBiz), are still using a traditional 1.0 business lens. They are looking at how they can use SocNets as just another channel to do business the way they have always done it. Listening to online customers is certainly an improvement, but not much of one when it just turns into the usual ‘what’s in it for me’ business operations. Enlightened SocCRM companies should be trying to understand the things that customers really want, looking at what SocCRM capabilities they need to build to deliver that, who they need to partner with to do it better than the competition and of course, how they are going to earn the optimum amount of money in the process. And as Edward Kasabov in an SMR article on The Compliant Customer points out, this doesn’t necessarily mean doing exactly what the customer wants all the time either. Sometimes the customer has to comply with how the company wants to do business. Value co-creation sometimes requires a bit of give and take too.

    A thorough understanding of the basic principles of value co-creation is a prerequisite for the intelligent application of SocCRM. The rest is up to the company, its customers and other parties.

    Graham Hill
    Customer-centric Innovator
    Follow me on Twitter

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

  2. Hi Wim,

    I’m just homing in on the last point you made about not waiting for feedback to come to you. This sounds very logical indeed – guiding the conversation to then obtain actionable insights. I’d describe this as Social Learning if you would not only seed the conversation but also be an active participant (become a peer). I’m sure the quality of the feedback and actionable insights will improve radically.

    We talk about understanding the customer, but shouldn’t we also be thinking about helping the customer understand us – provide insight and context – so that they in turn improve the value-in-return? Should the company’s objective for Social CRM not only be to assist the customer in reaching the desired outcomes in an as friction-free manner as possible, but then also put in place the conditions that favour customer advocacy?

    There seems to be an assumption that it is sufficient to ensure the desired outcomes that satisfy the customer job in order to have others flock to your company for their “job needs”. However, I have not yet heard much about putting in place strategies (Community building activities such as facilitating online community platforms, organising “Porsche Owner” Test-Drive days etc.) to favour customer advocacy.

    Maybe we should be looking beyond the job of the individual customer and look at the “social job” in the customer’s context for the competitve advantage that we seek. Advocacy may actually be such a “Social Job” – the need to communicate to others the benefits of favouring the experience you provide, and thus reinforce one’s own choice at the same time, or obtain social recognition from one’s peers.

    Good insights, Wim!

  3. Hey Wim,

    The object of Social CRM and the availability of voluntary consumer intelligence does make a potent package for any Marketing professional to act on.

    The key question remains if any action can be moderated using this social media to trigger further market edge.?

    Great insights indeed.

    Looking forward.

    Regards,

    Shrikanth.Iyer

  4. Hi Mark

    We all seem to treat SocCRM as though it is a new phenomenon. It isn’t. Some companies have been engaged with customers using social media like forums, blogs and so on for over a decade. Take Starwood Hotels’ William Sanders, aka the Starwood Lurker for example. He has been listening to customers’ posts about Starwood Hotels on travel websites like Inside Flyer, engaging with customers and helping them solve problems for over 10 years. He has even won travel industry awards for his services to the Starwood Hotels and its customers. Good SocCRM has been around for a long time. But it only works well for companies who already deliver a competitively superior product.

    You are right, companies and their partners co-create value together with customers. The quid pro quo is that companies need to be able to co-create value for themselves by doing important jobs better, whilst they are doing the same for customers. For example, the travel customer co-creates value by ‘hiring’ the Inside Flyer website to help him with the job of identifying the best deals for their next hotel stay. Starwood Hotels (through the Starwood Lurker) co-creates value for itself by simultanesously hiring the website to help it with the job of increasing the yield on its unoccupied rooms. And the Inside Flyer website, which provides a multi-sided market where travellers and travel companies can do business, co-creates value for itself by increasing its attractiveness to customers, travel companies and advertisers. A simple example of multi-partner co-creation in action.

    I would suggest that you think very carefully about ‘advocacy’ as a social job. Firstly advocacy should be seen as a means to an end, not as an end in itself. At least not in commercial organisations. Secondly, advocacy is the result of providing superior products, services and experiences, not of having build a corporate community or provided other social tools. For example, if it’s not downright insulting to customers, it is almost pointless for Frank Eliason to be twittering away about Comcast’s service while Comcast is regularly in the Top 3 of the MSN Money Customer Service Hall of Shame. And finally, as companies like Dell, Sprint, United Airlines and others know only too well, bad news travels faster and further than good news. As I wrote at the beginning of this post, SocCRM only works well for companies who already deliver a competitively superior product. The same is true for the kind of advocacy that companies want.

    Graham Hill
    Customer-centric Innovator
    Follow me on Twitter

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

  5. Wim,

    This point just about sums it up:

    “When they (companies) should be thinking how to further enable the Customer’s value creating capabilities, they are thinking of how to capture value from the Customer.”

    If organizations focused on that one thing, relationships would look different. That one statement requires plenty of change. It mandates that orgs have an intimate knowledge of their customers, their capabilities, their inner workings, and the key business drivers for their success. Most vendors don’t even get close to that in my opinion.

    Nice article.

    – Brian

  6. Wim,

    At first I thought this might be another attempt to explain somethin to people (value) that really doesn’t need to be explained. Why does a consumer give a hoot?

    Then I realized you were zeroing in on something I’ve made a central theme in my thinking – namely, that the customers job is what really matters. It’s the cornerstone to becoming innovative. The point you bring out is that marketing should and could focus on this as well because the interest is not in your product, it’s in the job (for interesting jobs anyway).

    So, I will now officially buy-in to the time being spent on value-in-use. It only took me a year.

    Mike Boysen
    Effective CRM

  7. Hi Graham,

    Thank you for your explanation, and I agree that SocCRM only works well for companies who already deliver a competitively superior product (and service).

    The way I see it advocacy would be the desired outcome (one of the ends) for the company, with the objective of customer acquisition. For the customer herself one of the desired outcomes may be social recognition or just simply the value of exchanging with others (means to an end). Think of all the people that bought an iPad simply as a “me-too” Social Object – you’ll have a difficult time convincing me that those millions of people actually had a specific customer job that could not be solved by any other means…

    I agree that advocacy is not the result of providing the tools, what I am saying is that, as part of the value that customers can derive from it and the benefit it has to the company, it should be actively taken into account in devising the service offering – facilitate getting the Social Job-to-be-Done done. Maybe Foursquare is an example to look at in this light : co-create value with customer, her social network, the venue etc.

  8. Wim –

    Excellent post (as usual). Long been an advocate of your view on value and the need to understand that it’s the customers defintion/perception of value that is the one one that matters.

    Mike – So happy to heard that you have comme to the light. Now Mark, Wim and I need to work on your ability to see value beyond just the customers job.

    Scott Rogers

  9. Hi Mark

    Don’t forget that customer jobs are much more than simply functional ones. There are also emotional jobs (how I feel about myself), relational jobs (how I relate to my close friends and family) and social jobs (how I want to be perceived by other people at large). The iPad example you describe could easily be an example of a combination of different jobs: functional ones related to a better way to read magazines on the move, emotional ones related to feeling good about owning a piece of ‘hot’ consumer technolgy, and relational and social ones related to being seen as an early technology adopter by friends.

    We ‘hire’ products, services and experiences to help us do important jobs. As new products are introduced that help us do the jobs more easily, quickly or cheaply, we switch to the new ones. For example, the job of listening to recorded music at home might have been done with an LP record in the 1970s. The record was replaced by a better tool in the form of music tapes in the 1980s, then by CDs in the 1990s, by the iPod in the 2000’s and most recently by web music services like Spotify. We are still doing the same job, but we hire successively better tools to help us do it.

    Back to advocacy.

    I would suggest that advocacy is not a real end at all. But rather, to use your example, a means to another end, namely customer acquisition. Would companies be interested in having lots of people advocating their products if it didn’t turn into increased cashflows? Not really. And would companies switch to another marketing tool if they thought it delivered better cashflows? Of course they would. The key is to see advocacy, or any of the other marketing, sales & service techniques, as ‘tools’ to be hired to do important jobs associated with acquiring, growing and retaining profitable customers. The trouble is, many companies get hooked on the new tools, often because their competitors are using them, and forget what the tools are there to do… to help them get important jobs done better than yesterday’s tools.

    Graham Hill
    Customer-centric Innovator
    Follow me on Twitter

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

  10. Jay

    As I hope I have pointed out above, value co-creation requires an emphasis on each of the parties that co-create value together, not just on customers.

    Whilst true that most companies only know about what they and their business partners value, but not what customers really value, going to the opposite extreme of only looking at what customers value is not at all helpful. And is guaranteed to lose you money hand over fist.

    Like many things in life, the most value is to be found where each party involved in co-creation gets enough of what they want to be satisfied. The challenge is to find out where this optimum is and then to ensure that just the right resources are brought by each party to co-create the optimum value.

    Graham Hill
    Customer-centric Innovator
    Follow me on Twitter

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

  11. Graham et al,

    First, Wim, I like the post, it does get to the heart of the issue-‘Help me get what I need to get done, done’. In order to get there, you (company) need to understand what I actually need to do. Social CRM provides a framework to help achieve this end.

    Graham, I am not on board (pun not intended) with your check-in example. The airline gives you a choice, you like the ability to choose which method to check-in, thus you are happy. The airline understood, learned about the job you needed to do, that you like the choice. There is value, good value to you, I do not see how that is co-creation of value. You even point out that the handset maker “through the money I have already paid”. I apologize if I am being obtuse, I am just not connecting the dots.

    Does co-creation need to be synchronous? A loaded question, setting myself up, I am sure. I believe, as Wim’s post focuses on, there are times where there is a simple straightforward value exchange and then there is co-creation of value. They are distinct, no?

    -Mitch

    Mitch Lieberman
    Comity Technology Advisors
    comityadvisors.com

  12. Good post and I agree with your whole thrust that value is a product of how a customer uses the product. I actually think that is a lot more, and you touch on those points when you briefly mention the emotional side of value propositions (I wrote a paper on this a ling time ago but never managed to create much value from it!) and also using social media to understand more about the buying process.

    Using the buying process as an example, it always seems to me that ultimate value is decided by an individual, for example the individual who has to navigate the buying process and/or the consequences of the buying process.

    And that’s why I think Marketing has it’s limitations. Although it’s often said “AHA” so Marketing has to focus on this aspect I think that this is far far from the reach of Marketing – it’s sales, and because the value is in the mind of an individual it is about the translation of marketing into benefits.

    I wrote about it here “Value is in the mind of a customer not a persona” http://www.walteradamson.com/2010/05/value-mind-of-a-customer-not-persona.html

    Walter Adamson @g2m
    Certified Social Media Consultant
    http://NewLeaseG2M.com
    Melbourne, Australia
    My social spaces and places: http://xeesm.com/walter

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