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What Customers Value Most
“The only way to succeed in business is to understand what customers are all about.”
So said R. Siisi Adu-Gyamfi, senior vice president of international and marketing for Textron Inc., during his keynote presentation at the recent Frost & Sullivan Sales & Marketing Executive Mind Xchange. “You can’t squeeze someone out of existence,” he said, referring to such tactics as overcharging for services. “There needs to be a balanced give and take; a value exchange. The key to finding that balance is customer knowledge—understanding what the customer values.”
Adu-Gyamfi discussed three steps needed to create a value exchange:
Customer analysis: Build a needs tree
Companies need to uncover the root of their customers’ needs. In B2B this is usually the desire to improve profitability (i.e. increase revenue, reduce costs/investments). In that case, it’s important to understand factors as a customer’s industry, value chain, financial performance, and buying behaviors. Then create a holistic view of the customer’s current operational state.
Internal analysis: Define your offering
How will your product or service create value for the customer? Don’t just say how; show how by quantifying the functional, process, and relational benefits.
Customer discussion: Demonstrate value
Show the total economic value of your offering, as well as both the positive and negative differentiators between you and your main competitors. For example, you may have a higher initial price, but lower maintenance costs, resulting in a better overall return on investment.
Adu-Gyamfi discussed the Eaton IFS product and its use in Wal-Mart stores as an example of a successful value exchange.
Executives examined how they could deliver value to Wal-Mart. They considered such areas as Wal-Mart’s need to maximize selling area and desire to keep the time it takes to build a new store to a minimum. One solution was the Eaton IFS, an end-to-end electronics “closet.” Instead of having to dedicate a large room full of electrical equipment from several vendors that would need to be installed over several days by a master electrician, the Eaton IFS is a prebuilt, space-saving electrical distribution system that requires only a small room and can be installed in about half a day by any electrician. Executives demonstrate to Wal-Mart management the space, time, and cost saving in real dollars, not just with platitudes. The result? Wal-Mart has installed the Eaton IFS in every store it has built since that meeting.
Dean,
You're so right. Taking a holisitic approach to customer centricity/customer value is a must. "Random acts of CRM" are nice, but certainly aren't a long-term strategy.
Graham,
Yes, it would be great if marketers came up with new ideas. But it would also be nice if the many executives still focused on growth at the expense of customers instead of in partnership with them would conquer some of the more basic approaches to customer centricity.
Ginger
This is not exactly new thinking. It was described much earlier by Michael Lanning as
1. Understand what customers want,
2. Organise to give it to them profitably and
3. Tell them about it,
in his excellent book 'Delivering Profitable Value' and together with Lynn Phillips in their 'Building Market-Focussed Organisations' methodology in the mid 90s.
Isn't it about time marketers came up with some new ideas?
Graham Hill
Independent CRM Consultant
Interim CRM Manager
Ginger, you & R. Siisi Adu-Gyamfi are right.
However the process for creating value does not STOP with marketing. It must extend through marketing into selling and include the strategic negotiation of your deals with clients. Creating Value in the mind of the client is the role of marketing and sales. However that great work can still disappear in an instant if your company / organisation is unable to retain or more appropriately "divide" the value appropriately during the negotiation!
This requires more than "skill". It requires a "process for strategic negotiation" that:
* Aligns the organisation (and everyone who touches a deal) to understand what our value is and what value we may seek from the client;
* Executes consistently across Marketing, Sales, Pre-sales, Finance & Management to create meaningful and tangible value during the sales process;
* Drives & measures results for each and every deal. AND - It works a treat!
Such an approach is important at all times, but, as you say, it is a life or death matter when there is economic uncertainty. I would recommend reading more on these think-inc guys website at www.e-thinkinc.com.