Creating Customer Value

by: Nandang S Nugraha | Total views: 44 | Word Count: 730 | View PDF | Print View

 by: R G Srinivasan

The purpose of business is to create and retain a customer.

Much has been written about customer orientation,
customer relationship management (CRM), Customer Lifetime Value (CLV)
metrics, Customer Centric organization models, customer retention,
customer care…add any high sounding word with ‘customer’ preceding or
succeeding that word and you have a new model, a new theory. Headline
hitting books, celebrity author seminars and training till another
theory comes along.

And we see the poor customer is still the most dissatisfied lot (that includes all of us specialists too, as customers).

What a manufacturer or service provider often thinks as a
market or value proposition, customers respond in a diametrically
different fashion. Why does it happen?

While business thinks in terms of products and derived
values, customer is looking at satisfaction. The key question is
whether all the strategy, product features, add ons and value creation
lead to ultimate customer satisfaction.

Now this may seem a little contradictory. To illustrate
it better let’s take the example of Cell phone services. Companies are
rolling out a new product every fortnight offering more value, in their
perspective.

Then the point is why does the customer keep switching
over to different service providers and products or packages so often,
if the products are offering value.

The key here is more value propositions are being
rolled out without looking at the very basic. Whether the value
proposed gives satisfaction to the customers. If not it is not
valuable.

The customer is buying satisfaction. Highest value is derived when the customer is fully satisfied with his purchase.

Some common myths in Value Creation

Myth # 1 More is often considered value

Buy one get one free schemes are rolled out. There is of
course an instant sales push. However at the end of the scheme the
customer feels that he had all along been paying 100% more for the
products and perceives that very product as costly once the scheme is
withdrawn. May switch to another product at the same price.

Conclusion: Dissatisfaction leads to value erosion

Myth # 2 Price is value

Many business considers lower price as offering more
value. More often than not lowest price products end up as the second
best with a higher priced product with similar product attributes
leading the market. The simple reason is the higher price product may
be offering a higher satisfaction due to perceived values and imagery.
Car markets are a prime example of this syndrome.

Myth # 3 More Features or add ons are value

Businesses load a product or service with more features
thus offering a higher value. While this may be attractive if the
features are not backed by adequate supports the satisfaction may be
less and value is reduced.

We encounter this everyday. A customer buys a product
with many features but not demonstrated properly or may not be serviced
properly. Enquiries may not be handled effectively. Airlines offereing
add ons like free overnite accomodation are still not favored if the
services, like enquiry handling, reservations, and time schedules are
poor. Cell phones companies may be offering plenty of add ons like
national roaming or free incoming calls etc. However if the billing is
poor and billing enquiries are not addressed properly the customer is
dissatisfied and leaves the service for another provider.

Myth # 4 Products are competing with similar products

This is often true in the leisure industry. A movie
theatre may not be competing with another movie theatre. If the
customer is not satisfied with a theatre or movie he may look at
options to other entertainment sources, for instance an amusement park.
We may call them discretionary time products. Highest satisfaction
levels are very important in this type of business.

These are some of the examples of how businesses can go
totally wrong in assessing value. While it is all good to talk of value
creation some thought must go into the majoe ingredient in value that
is the customer satisfaction.

And are business really serious about customer
retention. As even a novice to business knows it is far cheaper to
service and retain existing customers. The cost of acquiring new
customer is very high.

Now how many business have consumer satisfaction index to monitor this prime factor in customer value creation

About the Author

R.G. Srinivasan is founder of Born To Win Forum. He is a certified trainer and consultant in training design & methodologies, focused on personal effectiveness and motivational training. He is also the author of ebooks, publishes 2 ezines on success and motivation and Home Business with an international circulation. His articles are published in more than 50 portals and websites across the world. He is featured as an Expert Author in Ezinearticles.com. Check out his home business ezine at http://home-businessleaders.tripod.com.

indiaventurelinks@yahoo.co.in

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