Value is a concept often discussed in business, but value has been as hard to define as the measurement and management of the intangibles inherent in creating it. “A cynic is a man who knows the price of everything and the value of nothing.” And…
“A sentimentalist is a man who sees an absurd value in everything, and doesn’t know the market price of a single thing.” Oscar Wilde saw value as a matter of perspective:
We agree that value is a matter of perspective—not just from the customer perspective that Wilde described, but from the company perspective as well. To complicate matters further, just as there are differences in company perspectives, each function of the company may have a different take on value. For example:
- Finance: Uses cost as a surrogate for value – the money spent to create and deliver what is “presumed” to be of value to the customer.
- Operations: Focuses on internal efficiency methods – to deliver product as fast as possible while containing costs and limiting variation. Value is speed and quality.
- Research & Development: Sees value in features and technology that are “presumed” to be of benefit to the customer.
- Marketing: Tries to listen to both company and customer points of views, but in the end Marketing equates value with whatever they can get a customer to buy.
Each function’s perspective is limited and out of balance, yet each function has something important to contribute to a comprehensive solution.
That solution finds a balance between 1) the benefits provided to the customer and 2) the resources expended by the company compared to the price paid by the customer. But this is still an internal company view of value. The customer’s view of value needs to be considered.
Here’s our take on how to think about value from the customer’s perspective or Customer Value.
Customer Value is a combination of three components, Brand Value, Product Value, and Experience Value. These three elements of value are complimentary.
A negative on any one of these will detract from the others and from the overall relationship with the customer.
Brand Value is what the company promises to the customer; what the brand stands for; its reputation. And it is the value the customer associates with owning or using a product or service from the company.
Product Value is the value of a product’s quality and usefulness to perform its intended purpose for the price paid. Product value is the company making good on the promise of the brand to the customer.
Experience Value is foundational. The brand and product only have value when experienced by the customer. You could say that Customer Value is determined through Experience Value.
- In generic brands and commoditized products, the experience is generally unknown to the seller–except for the occasional, random customer survey, customer service calls, and now the roar of Social Media. The customer buys on price and specs.
- For differentiated brands, where the customer buys on value and relationships, the experience can be captured with Relationship Interactions.
Critical Relationship Interactions are a blend of all three aspects of Customer Value. These Relationship Interactions measure the experience the customer has with the company (the brand) and the people in the company who make and deliver on the promise of the product or service.
Experience Value measures how the Relationship Interactions reflect on the brand and the product and quantifies what happens–or how the customer is treated.
Relationship Interactions drive the experience of the brand and product—from the person who answers the phone, through the sales process, to order fulfillment, to technical support, to payments and collection, to the executive who thanks them for a referral. Every one of these Interactions has the potential to create value and create–or destroy–a customer relationship.
Executives are paying attention and investing in Customer Experience technologies. A 2014 Gartner CEO survey shows Customer Experience as one of four top priorities for technology-enabled capability investments over the next five years. Digital marketing was 38%, E-commerce and Customer Experience Management at 34%, and business analytics at 32%. It’s time. An overarching data point, according to Forrester, is that 81% of firms have immature CX programs. A Forrester global survey of 6,000 business and technology leaders shows that improving the Customer Experience is the top business priority for more than 75% of them.
Customer Experience Wisdom: Creating customer value is a cross-functional exercise taken in concert with customers.
Questions: Do you agree?
Are you ready to invest in improving what your customers experience// Then,