It has widely been argued that customers do not just want products and services, they want what those products and services will do for them. Many business leaders and marketers know this too well. It is no wonder that a top brand such as Coca-Cola will focus on the refreshing nature of a Sprite on an advert and not on the ingredients that go into making Sprite or its price. A business is in essence the activity of creating value for its customers. Customer value has been defined by many as the amount of benefit that a customer gets relative to what they give. There are key questions that everyone in business should regularly ponder; what do our customers give? What benefits do they receive in return? How can we stay on top in creating value for our customers?
Customer needs and expectations
Customers do not just give money to purchase a product or get a service. Does every business recognise this? Possibly not! In addition to money, customers give their time and effort, they give their information and they give their dependence. Holiday makers for example take time comparing options and many travel long distances for a well-deserved vacation.
It takes time and effort to do so. Receiving value for their money and time is every holiday maker’s aspiration. In a business-to-business environment, customers use rigorous procurement processes to identify suppliers they can rely on. They spend time and effort in the process. In hospitals, patients share confidential information with doctors and trust they will make the right diagnosis and not disclose such information without their consent. Customers who fly trust that the airline has observed high standards of safety and those with bank accounts trust their money is safe. The more money, time, effort, information and dependence we give as customers, the more benefits we expect in return.
Leveraging products and services
Customers have varied expectations. One of the basic expectations is that the product or service will be beneficial and not a waste of time and money. We expect other benefits too. Benefits differ within and across sectors.
A guest visiting a high cost holiday destination expects to enjoy the tranquillity of the hotel and an assortment of facilities. Another guest using a low cost hotel may just want a place to spend a night. In the insurance industry, customers expect peace of mind in case of an accident, illness or death. Customers who purchase elegant cars may expect a certain status, while those who purchase basic cars may simply want a means of transport from point A to B. Customers who visit select restaurants benefit from the wide variety on the menu that may not be available at a make shift road side food outlet.
Customers who visit mega supermarkets get pleasure from the huge selection while those that visit convenience stores at a petrol station benefit from the accessibility and ease of finding what they want. As long as customers believe the benefits received are more than what they had to give, they will feel that they have received value. Delivering value starts by understanding your target customers’ needs and expectations, creating, communicating and finally delivering value to meet and even exceed the needs and expectations. If your target customers prefer only bed and breakfast, provide it and make it very attractive. What should interest every business person is the fact that when customers feel they have received value for their time, money and effort, they exhibit high levels of satisfaction and loyalty. Such customers are more likely to come back and will even freely share their positive experiences with others. The opposite is also true, when customers feel short-changed they became dissatisfied, some may never come back and many will without doubt share their negative experiences
Staying on top in creating value for our customers must be an organisational-wide focus. Its aim is to attract new customers and retain existing ones. Every business must thus recognise what drives value in their kind of business and entrench continuous improvement to stay on top. Robert Kaplan and David Norton wrote in their book Strategy Maps that if customers value consistent quality and timely delivery, then the skills, systems, and processes that produce and deliver quality products and services are highly valuable to the organisation. All customers value consistent quality and timely delivery. Is your organisation providing this as a basic?
Saving customers time and effort
Every customer desires to reduce costs and increase benefits. A technique for reducing costs is becoming easy to do business. Benefits may be increased by offering extras that have minimal costs to the business. Such benefits may include but are not limited to being responsive to problems the customers are facing or simply offering tips on how the customer can improve their business or their experience.
At the corporate level, an organisation must work towards the value-based competitive strategy. More than a decade ago, I recall listening to a professor in a strategic marketing graduate class expound on value-based competitive strategies. Many organisations have made a choice between the less for less, more for more or less for more value-based strategic options.
Choosing to offer low benefits at low costs, however does not by any means imply that a poor customer experience is acceptable. Leaders must learn to see their businesses through the eyes of their customers and do whatever it takes to deliver value for the customer.