Your customer determines your value … not you

Hey there, time traveller!
This article was published 02/11/2024 (350 days ago), so information in it may no longer be current.

I often recall one professor’s statement from a first-year business course during my undergrad degree: the purpose of a business is to stay in business.

While that made sense at the time, it took a while for me to connect the dots in my head to confirm the way an organization does this is by delivering value that only it can deliver to the customer.

In a recent strategic planning session I was conducting, we focused on the value the organization must deliver if it wants the customer to select its product or service. Knowing this value is how you begin to earn the customer’s trust, confidence and loyalty to retain their business in the future.

While it is the responsibility of the company to create the product or service, it is the customer that determines their value to them.

Therefore, the concept of creating and sustaining a successful business has not materially changed in more than 40 years. To protect against the likelihood of not being differentiated from your competition and not being selected by the customer, you must provide something of value — and it must be of superior value to stand out.

Customers have different needs, according to individual business priorities. They evaluate these needs to determine what is most valuable to them and why they make the purchases they do.

Customers typically value one or a select combination of factors, such as price, ease of purchase, post-sale service, customization, inventory management, product support, etc.

I recently completed my fourth term as a judge for the annual World Customer Centricity Series awards. This is an honour and I am pleased to read about how companies have taken to the concept of customer centricity. The finalists are always from a wide range of industries, demonstrating any organization can do it if it wants to.

I believe there is a foundational three-step approach to ensuring you are delivering value to your customers.

First, study all data — including financial, quantitative and qualitative research, verbatim comments and/or reactions from customers and staff to identify trends and variances over time.

Think of this as a doctor monitoring a patient’s bloodwork. Some results may be within the normal range, but close to either the high or low end. If those results are consistent over time, there is less reason for concern. If the results of your data assessment vary over time, there is a need to determine why.

Second, assemble these findings and determine what your customers truly value.

Leading companies assess all data from Step 1 and determine the real purchase reasons and where and how they vary according to other factors, such as purchase order size and frequency. Compare these findings to what your competitors are offering and look for what only you provide — confirm your point of differentiation.

Third, share the insights with your team and build product plans and promotional messages around continuing to provide superior value for your customers.

To be clear, I am not recommending or suggesting you give the customer everything they might ask for. I am recommending the opposite of ‘everything’ and suggesting you focus on the value that only you provide. When your employees know what the customer values and you deliver, they can look critically at the entire purchase and post-purchase journey points of contact and ensure consistency throughout.

While this may sound simple, the process requires an open mind to consider you might not really know what the customer values about your product or service.

Ideally, this also helps you make customer-centric decisions into the future, rather than just short-term company-centric decisions. Factors such as price increases that may satisfy company objectives could backfire if there is no corresponding value delivered. The harder you work at the front end to determine what value to deliver, the better positioned you are to keep customers around for the long-term.

That is how a business stays in business. Just like my professor said all those years ago.

Tim’s bits: While the customer defines the value of your product or service and their willingness to buy it, companies are tasked with understanding their customers better so the proper value is delivered. In addition to specific research, leading companies include regular monitoring and tracking in their winning game plan to make sure there are no surprises on the horizon.

Tim Kist is a certified management consultant, authorized by law, and a Fellow of the Institute of Certified Management Consultants of Manitoba

tim@tk3consulting.ca