This week I hosted a delightful dinner meeting in Coronado to celebrate the release of my new book Hooked On Customers. In addition to local business leaders, long time CustomerThink contributors Dick Lee, Andy Rudin, and Barry Trailer flew in to join the fun.
Our dinner conversation centered on a simple question: “What is Value?” Gautam Mahajan, an expert in customer value management visiting from India, led a spirited conversation. A few key points stuck in my mind that I’d like to share.
First, Barry stressed that value is about doing “what matters” to the customer. A simple idea, but I wonder how many of us really know what customers care about, since it’s all too easy to get wrapped up in what we want to sell.
Second, value (as the customer perceives it) is not easily calculated, but after all the dust settles from a customer experience, what’s left is a perception. Did the customer end up with a good feeling, or not? It’s not about getting all the touchpoints “perfect.”
We also discussed the critical role of employees. If you want to create a successful customer-centric business, hire and recognize employees who give a damn about customers. You can’t train people to be empathic. Forcing employees to use a script and say “How are you?” when they aren’t being authentic can do more harm than good.
Finally, it was interesting what we didn’t talk about: Technology. The CRM craze was mostly defined by using technology to extract value from customers, not to deliver it. While technology is an essential enabler of modern business processes — and customers certainly don’t like it when technology doesn’t work — technology-enabled experiences rarely leave the kind of emotional imprint that define genuine customer loyalty.
So I’d suggest taking a step away from the day-to-day chaos that defines our business lives and see if you can answer these questions:
- Do you know what really matters to your customers?
- What emotion do they feel after they interact with your firm?
- Do employees genuinely care about providing a great experience?
- Are you giving too much attention to technology?
Bob, it’s great to read about your discussions around Value Creation. Your questions, when answered, will help others realize that by themselves, CX, CRM, etc. are important but mostly trying to avoid value destruction. I don’t think a happy customer or a delighted customer is the same as creating customer value which can translate back to revenue enhancement.
I would like to recommend if anyone wants to drill down on customer Value Creation, that they join the LinkedIn Discussion Group called… “Value Creation Journal”
Bob, I’m really looking forward to your new book “Hooked On Customers.”
Bob – I learned much from the discussion, and in particular, I was struck by the breadth of viewpoints for value – all of them logical. For the “right” definition, I consulted my Dictionary of Economics and Business, published in 1978: “the utility of a good weighted by its price. Also the quantity of one good that is exchangable for the quantity of another good.”
Sounds “official,” but now I need to unpack what “utility” is – which one economics professor described as made up of “utils.” I’m as unclear today about the concept as I was back when he explained utils in class.
All of which points to the fact that we still have a long, long way to go when it comes to having clarity about value, how it’s created, transferred, and sustained. I think 200 years ago, humankind had a similar level of understanding about heat. People knew it existed, but they couldn’t precisely define it, let alone understand exactly what caused it. Happily, today we’re much further along. No reason why we can’t do the same with ‘value.’
I appreciate the opportunity to be part of the discussion, and am very glad that you chose to tackle this topic – not an easy one, but one that needs to be continually examined and talked about.
Thanks for your comments.
Jim, the new LinkedIn discussion group is great resource. And I suggest those interested in digging deeper visit http://www.valuecreationjournal.org/.
Andy, your textbook represents what many still think value means — a transactional view of goods for money. And in fact, it’s still one valid view — when customers want a widget, sell them a widget. The company that wins delivers more widgets for the money the customer wants to spend.
But in today’s service/experience economy, what constitutes “value” to the customer gets a vote from only one party — the customer. A good feeling, an experience, a product that does its job, an insurance policy that waits for a future need… each is valuable in some way to the customer. How can we tell? Because the customer spends money!
On the company side, value can be calculated more precisely, based on revenue, profit, or customer life time value. But again, some forms of value are intangible — like the value of a “strategic account” with an impressive logo or customers that submit ideas.
I think more companies need to focus on value creation beyond delivering against basic customer expectations, Likewise, as Jim suggested, just fixing problems is fine for avoid value destruction which stimulates churn, but doesn’t drive genuine customer loyalty.
Creating new value — which some call innovation, another fuzzy term — is a key trait that sets customer-centric leaders apart. Intuit’s “Design for Delight” program, which I write about in my book, is one of the best examples I’ve seen of a well-executed strategy to do more for customers in a way that also drives value for the company and its stakeholders.