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Value creation begins with understanding your customer.
Customers, through their purchase decisions, are the final judges of value. Create value for customers by understanding and delivering optimum performance in the areas that matter most.
delivers customers
improvement
Value is relative.
Value isn’t creating and delivering a good product. It’s not offering a service which garners high customer satisfaction scores. To be a market leader, you must provide an offering whose performance and price, relative to competition, represents the best value in the marketplace.
To deliver performance that customers recognize, we must first understand what drives their purchase in the first place. All products have attributes but not all attributes are equal. For example, some people may buy a phone for the camera or graphics while others buy for its operating system. Understanding both the factors that customers contemplate when evaluating a product and their relative importance is key to driving value. We must strive to be the best in the things that matter most.
Price is what you pay. Performance is what you get. Thus, the companies that offer customers the most value are the ones whose offering provides the greatest level of performance for the lowest cost in comparison to various alternatives. Thus, you can make a great product and sell it at a competitive price. But if a competitor developed an alternative that offers equal or greater performance at a lower price, their offering provides more value.
Customer-centric approach to value.
Identify the factors that drive customer buying decisions.
To effectively measure and improve the performance of your offering, you must identify the factors or attributes that customer weigh when evaluating competing alternatives. Getting direct feedback from both customers and non-customers enables us understand what drives and motivates all buyers within your respective market.
Weight the factors for importance.
After creating a list of key attributes, you must determine the relative importance of each. While a customer may weigh multiple things, they most likely will not weight them equally. To ensure our offering is perceived well, we must ensure we deliver exceptional performance in the areas that matter most.
While customers (example right) compare offering's performance across eleven attributes, performing well in Reliability is 7.5x more important than Billing Accuracy.
Assign performance ratings.
Once the key attributes have been identified and their relative importance determined, we ask customers to provide a rating within each attribute for you and your competition. The result is a quantified view into how customers perceive the performance provided by you in comparison to the competition.
Determine perceived price.
For some goods such as gasoline, evaluating price is easy and straightforward; $3.15 buys one gallon of gas. However, estimating the total price of other offerings can be much more complex. For example, to determine the actual price of a car, you must account for several different things such as rebates, trade-in allowance, resale price, and financing. Thus, as part of the research and discovery process, we gather feedback from customers and non-customers to understand how the market perceives your price.
Clear understanding of your value proposition.
The results of the research and discovery process are compiled into two impactful reports: a Performance Scorecard which demonstrates your performance in each attribute against your competition, and a Competitive Landscape which clearly illustrates the value proposition of each competitor in the market.
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