Wim Rampen: The future of marketing - understanding value co-creationby
5th Jul 2010
In the second article in his series, Wim Rampen explains the concept of value co-creation and its role in the future of marketing.
This is part two in a three part series on the future of marketing. Last time I wrote how Service Dominant Logic and its value-in-use thinking can be helpful to rethink your marketing goals and approaches. Today I will explain the concept of value co-creation, whereas in the third article I'll try to provide you with the implications for today's marketers, willing to explore new territories.
What is value co-creation?
Last time I explained, through this great quote by Strategyn's CEO Ulwick, that "From the customer's perspective, it is the job [the customer needs to get done] that is the stable, long-term focal point around which value creation should be centred because the job's perfect execution reflects the customer's true definition of value".
I will not dive deeper into the definition of "value", but I do think it is important to understand that in order for a customer to be able to create value for himself the customer needs a whole lot more than just your product or service.
Unfortunately most companies consider their jobs done when the product or service is sold. Of course, most companies will have some sort of customer support or service department, yet the scope and capabilities of these departments or functions are usually limited to a reactive approach. They are usually waiting for a customer to show himself when he/she has a problem with the product. Most likely the company has also made a real effort to prevent customers from getting an easy resolution of their problem, caused by either "call avoidance programs" or just very poorly designed problem resolution processes. And then I'm not even discussing the lack of companies' capabilities to capture feedback and truly learn from repetitive problems by fixing them. And no, listening in on social media does not make you a good "listener" either...
Back to the core now: when you follow the logic of service and its value-in-use thinking it is just a short step away from understanding that value creation is a process, not a moment in time. Following this understanding it is also clear that this process requires at least the company AND the customer, whereas the customer plays the most significant part. More so, in today's world it is likely that the customer hires multiple products and/or brings in multiple resources to get the job done, whether you like it or not.
A good example in today's hyper-connected world is the way customers "hire" other customer's expertise to be able to get their jobs done. Think of it: how often have you asked a colleague, friend, relative and even total strangers (e.g. through the use of social media) a question to provide advice on how to get something done? Think of it: what resources (as in knowledge, understanding, competence, etc. too) do you need to drive your young kids to school safely? Surely a lot more than your car. And how is this job different from driving by yourself a 1,000 miles cross-state during the night to meet with (potential) customers?
This is what value co-creation is all about: understanding that there is more to creating value than what your company provides. Understanding too that how value is created does depend on the context of the job and that those contexts might change over the lifetime of using your product or service. And, value is actually always co-created, and it is marketing's responsibility to support the customer in that process, not just customer service, or the billing department.
(Just for the record: co-creation of products or services, is not the same as co-creation of value, although to some extent co-creation of products/services can surely be a way to co-create value, because it may well be the case that being able to help a company in the process of creating better products or services, is a job (some) customers want to do.)
What's all this got to do with the future of marketing?
What is the role of marketing in the process of value co-creation? Let's be frank: most marketing departments hardly play a role in the process of value co-creation, albeit one could argue that customer's expectations, can have significant impact on how the customer perceives your company's (product) contribution to his value created. And we all know how marketing often has a lot to do with how customers perceive the expected return of their investment.
It is about time that companies in general, and marketing departments in specific, change the game from driving prospects through the funnel towards value exchange, and start playing on the field where value is co-created. This not only requires an understanding of the job customers are trying to do, it requires a thorough understanding of what the customer's role is in this process, it's context and the resources leveraged by the customer to achieve his desired outcome.
For only this understanding and insight will allow you to truly help the customer in improving his process of value co-creation, instead of developing campaigns to retain some that emotionally have already left the building. Yes, maybe this even requires an increase of service interactions, not avoidance. And yes, maybe you have a different set of "targets", as in not-customers or -prospects, to address your campaigns. Who? And what for?
I'll get to that next week, in the last part of this short series, I'll dive a little deeper into how you can obtain these insights as well as into what (new) capabilities you need to develop or improve to increase your likelihood of achieving your own desired outcome too. We're in business, not charity, after all.
Please let me know what you think in the comments below, or get in touch with me on Twitter.
About Wim Rampen
Wim Rampen offers fresh perspectives on your customer-related challenges, based on 13+ years experience in (leading) customer facing departments & projects. In solving the challenges you face, he applies analytical and creative methodologies for analysis/research, problem definition, ideation, testing & implementing the solution(s) created together with clients. For more information visit Wim Rampen's Blog.
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Great article, Wim.
Some 50+ years ago Theodore Levitt pointed out that customers don't want a quarter-inch drill, they want a quarter-inch hole. Problem is that seems to be increasingly forgotten. Levitt's seminal Marketing Myopia was the first thing given to MBA students for many a year. In many respects it marked the beginning of the marketing Enlightenment. Unfortunately many of the lessons it talks about have been forgotten. He championed the focus on delivering customer satisfaction rather than pushing products. It was the role of marketing to focus on an external constituency rather than an internal construct. (No one else in the organisation would.) Unfortunately that external focus has been forgotten, though rather than pushing products marketing is pre-occupied with building brands. We are naturally egocentric, and branding panders to that tendency - encouraging marketers to look in the mirror rather than out of the window.
Love your thinking here. The strongest customer relationships are based on mutual self-interest. Organizations choose which customers they will target, and what needs they solve for target customers. And every experience starts with a person who has a need, problem or desire they would pay money to have solved.
So this mutual self interest is the very heart of every customer relationship -- and yet as you note, too often leaders simply provide products and service and think the job is done. In the end, what we solve is more important than what we sell.
This means that future-thinking marketers will understand the target, or ideal view of what should happen and how customer should feel as they realize the need, learn about options to solve it, try them out, buy, use the product or service to solve the need, and even evolve to a new need over time. Daily actions and longer term strategies will be set to earn consideration, demonstrate why the organization is the best "co-creator" to solve the need, protect them as they buy, prove the promise as customers solve the need, and anticipate how the customer's need will evolve.
Marketing plays a HUGE role in supporting the customer in this process. Thanks for the thought-provoking reminder.
Linda Ireland (www.customerexperienceforprofit.com)
Thx for the great quote: "what we solve is more important than what we sell". In the spirit of value co-creation I would like to add that, whilst understanding the problem we solve for Customers is imperative, in order to get there it is even more so important to understand HOW the Customer solves his problem.. There is a wide range of resources leveraged by the Customer to solve his problem, and your product or service is only a small part in that equation.
Understanding all parts of the equation for the specific job a Customer is trying to get done, is important and just the starting point. Improving the Customer's capabilities to access and leverage internal and external resources that enhance the Customer's experience and improve the Customer's ability to reach the desired outcome, should be at the core of Marketing's strategy. Because that's what service is all about, and that's what creates and retains Customers.
Glad you liked it & thx for sharing your thoughts.
Stay tuned for part 3, which I will finish soon..
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thanks Wim for a thought provoking read. Loved the idea of initiating co-creation right at the Marketing stage. The biggest myopia we see companies demonstrate is when they showcase product 'features' as the 'value' they think they are bringing to the table, while marketing.
Few questions it raises though (and I'm sure you might have thought of these already, and will possibly address them in the next of this series). One, when we talk about customer value - in most of the cases, the perceived value provided to the customer is supposed to be unique to him/her and the specific situation. In what way do we apply this concept to mass-marketed products. If done in a segmented fashion, it might still have a component of generalized product offering to it, that might defeat the purpose to an extent. Are we looking at pure play mass-marketing taking a backseat in this era of social media proliferance?
Just some thoughts that your article provoked as I read through .. awaiting its sequel and thanks again.