2. Prove differentiated value
Most companies use significant resources on analysing and documenting the features and benefits of their own products and solutions, focusing on areas where they believe to have a competitive advantage. However, only 35 % of companies in our study have a solid understanding of what truly drives value for their customers.
Winning companies act differently. First they develop unique value-driving offerings for specific customer segments. For each of the segments and even individual customers, they can document a measurable difference compared to competitors as well as prove the specific financial value for the customer. The delivery of differentiated value is then defined for every touch point in the customer experience. Finally, these realisations are then documented to provide tangible proof of value creation to new leads and prospects. This approach, of having clearly defined and proven differentiators, results in a number of financial benefits:
- It allows higher value capture and profitability as differentiation drives the ability to command a price premium towards selected segments and customers
- It leads to higher win rates through higher perceived value creation and perceived uniqueness in relation to the competition
Questions CEOs should ask themselves:
- Can you measurably prove the “delta to competition” of your offerings?
- Can you prove and articulate superior value creation for your key customers?
3. Measure customer value creation
If you ask a typical company whether they measure customer value, most would answer with a resounding “yes”. Then they would proceed to explain how they track things like customer lifetime value, customer satisfaction and turnover/profitability per customer. While these are all important metrics for commercial and operational purposes, they do not help to measure the company’s differentiation, and how much value the customer actually experiences.
Winning companies instead measure aspects that are tied to the experienced customer value. This includes metrics such as total profit of ownership and customer loyalty metrics such as NPS® (Net Promoter Score®). However, their full value is only extracted when the company’s score is analysed in relation to competitors. Winning companies measure these aspects of delivery consistently and on a customer-specific basis in real time. The best performers even take direct customer feedback and deliver it to responsible employees, who are given the means and authority to contact the customer directly to resolve issues.
Building a customer value measurement system that allows for tracking, analysis and follow-up based on customer value metrics has several benefits:
- It provides decision-makers with relevant data on how the company is satisfying the needs of customers independently and in relation to competition
- It aligns front-line employees’ actions with customer value drivers and gives them the means to follow up on and improve the customer experience
- It allows the company to continuously improve its offerings with a foundation in leading indicators of differentiation
Questions CEOs should ask themselves:
- Is experienced customer value tracked and measured consistently?
- Are front-line employees provided with real-time customer feedback and the authority to ratify issues when they arise?