‘Co-created value’ the key to avoiding negative customer relationships?by
Bad news: your customers are easily disappointed, quick to judge and unlikely to forgive you for your indiscretions. That’s the verdict of comprehensive research from SaaS provider, Thunderhead.com, which highlights the size of the commercial and reputational risks affecting businesses as the result of poorly managed relationships with customers.
The paper Engagement 3.0: a new model for Customer Engagement explores the effect the power shift from organisation to consumer is currently having on interaction and engagement strategy in business, and claims that many organisations are still delivering “irrelevant and impersonal communications which are not informed by customer knowledge and insight and fail to provide value”.
The research also reveals a growing impatience among consumers towards brands that don’t comprehensively fulfil their needs. It states that many of those involved in the study have a much lower threshold for organisational failings than in previous years, and that for the majority of customers, three negative experiences are their limit – at which point they will look to switch their business to another provider.
In contrast, ‘co-created value’ is deemed to be the key to successfully managing customer relationships in the near future, and that delivering value to customers is becoming a shared creation between business and customer, through building engagement.
The theory behind co-created value is that businesses provide customers with information about products, services and brand values, while the customer provides information such as their preferences, demographic information or insight into their journey behaviour through their interactions, and that as a result businesses should be using the pool of knowledge more effectively as the starting point for engagement.
Over time, this exchange of knowledge increases the accumulated pool of knowledge between both parties, helping businesses better identify value for customers and building trust and driving engagement as a result. The research suggests that this is likely to be one of the most fundamental aspects of building good customer relationships.
There are said to be 5 fundamentals behind putting this into practice: personalisation, contextualisation, relevance, knowledge and journey. Personalisation in terms of the understanding built up by a brand in relation to each individual customer; contextualisation in terms of knowing the stage and situation a customer is in at any particular time; relevance in terms of the interactions they create (for example, if they were a bank, making sure they didn’t offer a bank account deal for married couples to a customer that was single); knowledge in terms of using the correct customer information to build trust; and journey in terms of understanding the importance of engagement over time, and the ability to look beyond individual interactions and focus on an end-to-end customer journey.
As well as external messaging, internal communications were said to also be a driver in prohibiting positive customer relationships, with a lack of good CRM practice and many businesses having an inability to “co-ordinate or join-up, share and connect customer information and insight across departments internally”.
92% of the customers involved in Thunderhead’s research stated that on more than one occasion in the last 12 months, they had had to provide the same set of information to different departments when dealing with a specific business. 31% of those felt so negative as a result of the experience that they were likely to stop doing business with the company concerned.
Chris was an Editor at MyCustomer from 2014 to 2022. He is a practiced editor, having worked as a copywriter for creative agency, Stranger Collective from 2009 to 2011 and subsequently as a journalist covering technology, marketing and customer service from 2011-2014 as editor of Business Cloud News.