In our last issue of Customer Intermarketing we discussed the issue of “value”. Value is a critical component of creating customer satisfaction and genuine customer relationships, and therefore also a critical component of your marketing success.
Customers aggregate various elements of the value proposition in order to define value from their own perspectives. Value may be created in several different ways, and it is critical that you really understand what forms of value are considered most important by the segments of the market in which your business is interested.
Customers often comment on the “little things” that get in the way of value creation. They comment that companies make it difficult for customers to get through on the phone, don’t call back when messages are left, install systems and processes that get in the way of efficient service delivery, provide inadequate procedures for notifying customers when service will be impaired or delays encountered, and so on. These are irritants which are impediments to service delivery; they are value detractors. They also reflect a situation where management has not given adequate attention to access and convenience value. Many managers, in our experience, are still defining customer value in terms of value for money. When they set out to add value they tend to focus most often on product enhancements and price deals.
Also in our experience, your employees are often the most important creators of value. Every time they interact with your customers, they have an opportunity to create added value. The employment culture of your business is, therefore, critical to creating value for your customers. Businesses must understand that the customer’s definition of value is very complex and that the creation of value for customers represents a critical component in a company’s quest to establish genuine relationships with its customers. In short, to create the desired culture of customer service and relationship building, management must appreciate the importance of human resources principles in the provision of customer value. To create genuine value for customers, management must ensure that sufficient emphasis is placed on the employee component of value.
The introduction of technology often interferes with value creation. Many customers dislike the impersonality of service created by technology and perceive its introduction as a means for the firm to reduce costs (watch for our upcoming Customer Intermarketing newswire on this topic, The Effects of Self-Service and Technology on Customer Relationships).
There is a tendency in some firms and in some situations for service providers to assume that the customer is always looking for the lowest price. But many customers are simply not particularly interested in obtaining the lowest possible price and will forsake a service provider that stresses the lowest prices in order to obtain added service or other components of value. It often surprises some clients to find that at least some of their customers are actually prepared to pay more, if they could simply receive the kind of service and treatment they want and that would impress them. Firms must look to different ways to set themselves apart from the competition. You must look to new value creators and value enhancers that are more likely to attain a higher level of value creation in the eyes of your customers.
The key is to develop services, programs and processes that increase value for your customers. If you have asked your customers what they value and have truly listened to their responses, some of the programs and processes you implement may be surprisingly simplistic. Databases that capture customer information and assist you in making decisions on what value components are most critical to each customer segment are one important tool, as are various measurement tools for identifying customer needs and desires (see Measuring Customer Value in this issue).
Value Creation to Loyalty: the link
Loyalty is very closely related to the concept of a relationship. Genuine loyalty stems not from some artificial bond that makes it difficult for one of the parties to the relationship to leave. Rather, the foundation of loyalty is in sustained customer satisfaction; it is an emotional, attitudinal connection, not simply a behavioural one.
In order to increase loyalty, you must increase each customer’s level of satisfaction and sustain that level of satisfaction over time. To raise satisfaction, value must be added to what you offer to your customers. Adding value leaves customers feeling that they got more than they paid for or even expected. Interestingly, customers have told us that adding value to the offer does not necessarily mean lowering prices or providing more product for the money, both of which are the most commonly adopted corporate attempts to add customer value.
Satisfaction is tied to what the customer gets from dealing with a company, as compared with what he or she has to commit to those dealings or interactions (see Customer Intermarketing Issue #4, Creating Value For Your Customers – Part 1). It is useful to think laterally about what it is that customers get from your firm and what it is that they must “spend” or “commit” to get it. Adding value can be as simple as improving service through added convenience and access. It can also include employee training so your staff members are better able to answer customer questions and make recommendations for products and services that will satisfy the customer. It may mean personalizing the service, or being more responsive and attentive to customers. In other words, offer great service! Customers are prepared to pay for great service and for being treated well. Such treatment effectively takes the customer’s eye off price. Where customers see all firms as being essentially the same, they will generally default to price as the defining value differentiator. Not a position you want to be in…
By increasing the value that the customer perceives in each interaction with your company (even if it does not end in a sale), you are more likely to increase customer satisfaction levels, leading to higher customer retention rates. When customers are retained because they feel good about the value and the service they are receiving, they are more likely to become loyal customers. This loyalty leads to repeat buying, referrals and increased share of wallet.
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