Tuesday, November 3, 2015

How to Maximize the Link between what Customers Value and What Companies Provide

The key issue is to maximize the link between what customers value and what companies provide.

Building a customer-centric business is in every forward-thinking organization’s agenda. The customer-centric organization has the ability to capture what's going right, not so right, customer trends, insights and where improvements are needed. And it's about to align everything you do with a solid business strategy in which Customer Experience is an important pillar. But how can you measure Customer Value effectively?
Customer Value Added: The ratio of the value you add to your customers, and the value your competition adds to its customers. It correlates to loyalty, market share, and profits. Customer value should not only be measured based on the product or service but also upon the overall total experience, timing, digital touch point which are all important factors to consider. It shows the fallacy of simplistically competing on costs or on price. What matters is the margin between costs and perceived value.

NPS: Too often it is used as a transaction metric as opposed to an outcome metric with people looking at daily or weekly scores in response to a minor process changes that have been implemented, often capriciously. A specific caution to NPS: In most of the cases it asks people about their own network (for recommendations) and their own intentions (to recommend). None of them is given, reality might look quite different, especially in terms of recommendations to people with buying power and ambitions. So often, there is a gap in that customers are signaling a high portion of value coming from 'product,' but business don't understand explicitly what. NPS only goes one inch deep, businesses shall dig three-feet in-depth to find the root cause of business problems.

The key issue is to maximize the link between what customers value and what companies provide. There’s measurement discrepancy between what matters for business and what matters for the customers. Often, what is most important is what the customer does not tell you -- their unarticulated needs. For example, an intense Voice of the Customer program that starts with extreme flexibility and openness in soliciting customer wants, and then narrows down the process using detailed quantitative studies that first narrow the field, and then get into the trade-offs so that businesses know that what they are giving the customer is both what they really want and what they are willing to pay for (conjoint/discrete choice). The latter step is critical to ensure that the goal of "adding value to the company by adding value to the customer" is achieved. In addition, Total Customer Delight is an index of Total Participation in the Growth of the Enterprise, directly or indirectly. It defines the degree of value ownership of customers in the enterprise.

There are both objective and subjective component, direct & indirect factors to measure customer value effectively. Whatever tool is used, it must be able to provide actionable data. Metricians tend to be left brainers, they can only operate by addictively trying to measure things. The whole-brain view can intuitively perceive and pinpoint what one really needs to know, and can do it within seconds. What does anyone feel is the most effective way to link the hard measures with the desired soft outcomes is how the customers are experiencing the business, and adding value to the company as well. The measurement needs to keep the ultimate goal in mind - to build a customer-centric organization.


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