Customer Value is Most Important

“Creating value is an inherently cooperative process, capturing value is inherently competitive”. – Barry J. Nalebuff

The success of everything that companies do with relation to customers – innovation, ramping up customer service, lowering the cost of operations, improving quality of communication via all the channels available and many others – depends on customer value. This is probably why some companies succeed tremendously when they implement such changes while others either remain where they are or fail miserably. The premise would be that since these improvements are the essential portions of the ‘customer service rule book’, everyone who practices them should succeed. But as has been observed, these improvements and efforts work only for some and in particular situations. The reason for this is customer value – the customer’s perception of value to them. If and when a customer attaches importance to what is being done and the products being sold, only then does the strategy and product succeed. The customer’s perception will decide whether they would want to buy a product, at what rate and what they would not buy for any price. Customer value is what will keep a company consistently profitable and grow at a faster pace than their competition.

Customer value is a matter of the customer’s mind – the acuity that the customer has of the offerings and customer service of a company. A company could be of the opinion that they are offering the best products, with great quality, excellent processes and strategies that are backed up by superior customer service, but none of this would be of any use if they are not aligned with customer value. The success of all these lie centrally with the value a customer derives or perceives. Ideally, companies must look at the current scenario through the eyes of the customers and only then would they be able to figure out why their best strategies failed while strategies of others took them to success. There is no doubt that this conundrum can be perplexing and frustrating for companies but there is no escaping that customer value is most important and has the ability to make even marginally good products succeed while heavy discounts on better products might fail abysmally.

Customer value changes and with it changes their decisions to buy or do business leading to unexpected windfalls for one company and plagues of defeat for some. One customer may visit a high-end salon for services due to the prestige and ‘snob value’ of the place while yet another may visit a lesser known name since the effect they perceive is the same. The fact is whatever value these customers see in either of the two salons is the reason they visit it. This happens in offices too. They will stock up on the latest equipment and even the best coffee machines, but don’t pay their employees half as well. They would much rather organize office parties, free food, company outings and such. The truth is these external shows of a great company are what seemingly attract customers – internal and external. Customers are known to buy one or two particular products from the same shop each time irrespective of the price or store location. They may even wait if the product is out of stock or buy it from the online ‘store’ of the company rather than buy it elsewhere. It really is quite inexplicable!

Despite being strange or frustrating behaviour and buying patterns, the fact is these are very common. Almost every customer will display some such pattern or behaviour and companies just have to comply despite the obvious difficulties and discomfort. The buying choices that customers make come down to what they see as important to them and their needs – customer value. If something catches their fancy, they would even pay a premium for it – like fancy and VIP number plates for cars even if the car is not the most expensive or top of the line. These same customers would probably buy something else because it was available at throw-away prices even though the quality was not that great. Customer value is assigned to everything that customers buy or don’t buy and unfortunately for companies there is no method to this madness and they just have to go with this tide called customer value. Is there some way however, to know or determine customer value?

– Companies must focus on first understanding why customers attach value to one product and not the next. They are searching for solutions and if the product and service is not fulfilling a certain need, there is zero customer value attached to them. Companies must address the needs of customers – look at products as a solution to those needs and promote them so. Addressing the customer value will allow companies to be more successful in getting customers to buy and provide repeated business. Provide for customer value by satiating the need – emotional, status related or simply economical – and you would find your company striding ahead faster than others.

– Having said the above, the complexity lies in the fact that customer value means different things to different customers. For one customer the product may have value due to its longevity while for another it may be of value because of how it looks and to a third because of what the product delivers. If your product is delivering all three ‘values’ you would have all of them buying it. Miss out on one of these factors, and you have at least one less customer. It is lucrative for companies to think of customizing this customer value wherever possible, to ensure a larger and more profitable customer base.

– Getting a grip on customer value would enable companies to figure out and concentrate on their most valuable and profitable customers. These are the customers who not only provide repeat business but are great with testimonials and referrals too. Their opinion is valued across industries and hence your company and its products gain significant support in the tough marketplace. This is a great way to gain profitability and also understand more about customer value based on feedback received from other existing customers and prospective ones.

– If a product suddenly finds acceptance from customers and there is a lot of customer value attached to it, it creates a sort of buzz and urgency for the company to keep the excitement up. It allows encourages the sales teams to close deals quicker with added benefits to the customers and in the long run for the company. Such customer value also shakes up the market and provides leads and pointers for others to try something similar, making it even more beneficial for customers due to more choices at even more competitive prices.

– Through careful and meticulous planning, companies can influence customer value. This should be done at the point of the first sales meeting. Adept sales personnel would be able to quickly grasp the needs and expectations of the customer from a product and then position the product in a manner that the customer can see the benefits to them. Using this method of value positioned sales the product can be ‘customized’ to fit the customer value leading to a more solid relationship and also surety of long term and repeat business.

Before a company can even decide to launch a new product, tweak an existing one or raise the prices on a product, they would only be successful if there is a great deal of customer value attached to it. Customers will pay if they perceive its value to them and will refuse to pay even a bit extra irrespective of the improvements, if they don’t see value in it. The trick is to let customer value drive your company’s offerings, strategies and forecasts. Once customers can perceive this to be the case, everything you offer to customers will be perceived with this value making it easier for your company to know what to put on offer and what to completely stop. To deliver true customer service, companies must understand that customer value is the strongest link to success and sustainability.

Learn about a new approach to better customer service!

Interactive Guides for Superior Customer Service

Create interactive decision trees for customer service management, cold call scripts or self-service. Improve sales performance metrics and customer delight across your call centers.

Interactive Decision Tree