Customer focus no longer means just researching current and future needs in order to design expected or desired goods and services. Instead, a rising trend in business today is co-creating value with customers.
Value is created when a product and buyer come together within a particular use situation. Some examples include retailers getting the customer involved in the shopping experience to save time (Home Depot’s self-checkout) or costs (IKEA’s assembly and delivery by customers), smartphone personalization through app selection and Dell’s online built-to-order computers are others.
Another is utilizing management consultants who collaborate with clients to add value in research projects.
Co-creation of value can lower costs, increase benefits and improve the overall service experience for both the organization and the user. As the table below explains, co-creation of value has a dual emphasis on the customer and company as value creators and is an applicable business strategy in a wide variety of market contexts. Airlines, supermarkets, supply chains, theaters, theme parks and retailers have all embraced co-creation of service opportunities through self-serve initiatives such as check-in, checkout, price checks, information/purchase kiosks and other technology enhancements.
Value Creation and Marketing Opportunities
|Marketing Strategy||Market Emphasis||Value-Creation Focus||Corporate Examples|
|Market driven||Established market||Customer||Coca-Cola, Procter & Gamble, Toyota|
|Market driving||Emerging or imagined markets||Company||Google, IKEA, Virgin Group|
|Co-creation of value||Established, emerging or imagined markets||Customer and company (simultaneous)||Amazon, Apple, LinkedIn|
A great example of the new co-creation of value model is illustrated in the case of Crushpad, a Sonoma, Calif., winery. Crushpad is a state-of-the-art winery where customers choose their level of involvement for small lot wine-making — typically 25 to 100 cases — based on their interest in the production process.
The company allows customers to develop wine-making plans, engage in hands-on activities, such as sorting, de-stemming, crushing, fermenting, pressing into barrels, labeling and packaging bottles, and even distributing and marketing the products. Wine enthusiasts, restaurants and retailers have co-created value with Crushpad, and as a result, the business has launched more than 150 world-class brands.
The rock music industry has also experimented with co-creation of value. Radiohead’s “In Rainbows” album was sold directly to more than 2 million consumers who paid what they felt the music was worth. The symphonic band Renaissance also raised more than $92,000 from 860 loyal fans to record a new CD called “Grandine il Vento.”
Innovation and creative collaboration allow the smartest — not necessarily the biggest — companies to win in the marketplace.
Here are six questions to think about as your company ponders the idea of co-creation of value.
1. Do you strive to continually exceed customer expectations?
2. Does your view of value creation go beyond the firm (to include the customer)?
3. Do you actively seek to create an extended community of users?
4. Is personalizing the customer experience a major part of your marketing strategy?
5. Is your marketing team truly obsessed with researching and improving customer experiences?
6. Do you nurture and forge enduring business relationships with customers and collaborators?
Art Weinstein, Ph.D., is a professor of marketing at Nova Southeastern University and author of “Superior Customer Value: Strategies for Winning and Retaining Customers.” Visit his website www.artweinstein.com or reach him at email@example.com or (954) 262-5097.
Sometimes it’s hard to focus on the basics. Technology changes on a daily basis, new competitors arise and the market is constant turmoil. It’s important, however, to slow down and take the pulse of your company. Are the fundamentals in place for a healthy balance sheet? A good place to start is making sure that you have a clear value proposition in place.
“A value proposition is a clear statement of the benefits a customer will receive from purchasing your products or services,” says Steve Carter, president and CEO of ii2P. “Essentially, it is your brand’s promise. A strong and differentiated value proposition can help your business capture your target market.”
Smart Business spoke with Carter about value propositions, the importance of focusing on current customers and how to keep your business in shape.
Why is it important for a company to have a value proposition?
Having a strong value proposition can sharpen your company’s focus and allow you to hone in on your greatest strengths. I call this principle ‘sticking to your knitting.’ You can’t be all things to everyone. You can be the very best at what you do, however. It’s important to know thyself. Understanding who you are allows you to refine your value proposition so you separate yourself from your competitors rather than trying to keep up with them. You will never succeed if you simply try to keep pace with your competitors. They will always stay one step ahead.
Make sure that your value proposition is concrete. If you get up every morning and try to convince yourself that you have a solid value proposition, then you probably don’t. A lot of companies make their value propositions complex. This is a big mistake. There is a misnomer that a proposition requires complexity in order for it to be valuable. The simple, easy-to-embrace proposition is much more effective. Rehearse the value proposition, understand those elements of your business, and market what you excel at. Your value proposition should serve as your anchor.
What are the benefits of focusing on current customers?
Being successful doesn’t mean going after every available customer; at some point, you won’t be able to service your clientele properly. It’s important to cherish each customer that you do have. The reputation you achieve from making your customers feel truly valued is how you grow your business.
Your current customers are your most important ones because they have laid the foundation for the success of your business. Building a reputation on the back of excellent service creates a solid platform for growth. Don’t grow your client base any further unless you are able to treat your new clients as intimately as the ones you first established.
What are the dangers of taking customers for granted?
Customers need to feel like you’re taking them to a higher level through the use of your products or services. Your job isn’t just to deliver your product and walk away; it’s about making sure that your product has value to them. Ultimately, this strengthens your relationships and allows you to grow your own business.
Customers in today’s environment are looking for leadership. They want you to maximize the benefits of your products and services into their core business. Too often, they are treated as ‘revenue inventory’ rather than ‘loyal assets.’ While it seems simple, you need to demonstrate to your customers that you are willing to fight for them, not against them. Your entire business and support model should be structured to demonstrate that you value your core customers.
It’s crucial that you listen to them and value their feedback. Otherwise, they’ll take their business somewhere else.
How can a business prosper by ‘staying in shape'?
You need to make certain that the investments you plug into your business are the kind that keep you lean and strong. In order to make wise decisions, you must listen to the market as it is changing. The demographics for end users are changing, and they are much different than they were five to 10 years ago. Their requirements have changed considerably. Support is a key element in retaining and growing your business.
Creating effective intimacy programs, backed by a market-driven support model, will keep your costs lower and your customer loyalty higher. If your support model is still equipped from a legacy standpoint, it’s imperative that you update it. Today’s consumers want and expect self-servicing support strategies.
No matter how good your product is, if you have a legacy support system behind it, you’re not serving as a leader. Institute a self-support model that is easy to navigate and provides value. Once such a system is in place, you need to pay attention to the feedback left by the end user. Staying in shape is not a one-time thing. You need to be disciplined and continually improve your processes. If you have that discipline within your business, your clients will see that you are always meeting or exceeding their needs.
How should businesses balance the need for convenience versus security?
In today’s society, people generally prefer convenience over security. There’s a tradeoff, however. The most effective strategy is to use a balanced approach that guards your intellectual property while enabling users access to the information they need.
Implementing the most up-to-date technologies, such as password management protection, protects the end user. Securing your information today is no more important than it was a decade ago, but it is more difficult.
Make sure you are implementing practices and solutions to keep data and identity access secure. It cannot be overstated: Your intellectual property and your competitive advantage are perfect targets for your competitors.
Steve Carter is president and CEO of ii2P. Reach him at (817) 442-9292 or firstname.lastname@example.org.
Insights Technology is brought to you by ii2P
Here we are several weeks after the death of Steve Jobs, and many of you may be wondering if you could make a similar impact on your business, clients, and the world in general. Steven Paul “Steve” Jobs was an American inventor and businessman widely recognized as a charismatic pioneer of the personal computer era. He was co-founder, chairman, and chief executive officer of Apple Inc. You can read more about the man, Steve Jobs, in the recently released authorized biography written by Walter Isaacson, “Steve Jobs”, published October 24, 2011, by Simon & Schuster.Steve Jobs has been praised for his brilliance, passion, and energy that created countless innovations that enrich and improve all of our lives. Some would say that the world is a better place in some ways because of Steve Jobs. Sometimes in our reactions to another’s death we take the time to reflect upon the reasons for everything that we do in business, in life, in all.In this ever-changing world, you are all faced with issues addressing the viability and efficacy of your current business model. There are client/customer issues in how to remain competitive while at the same time delivering a high-touch quality service that meets the expectations of the ever-changing expectations of your clients.
There are internal issues from employees and colleagues who are expecting financial security and personal fulfillment from their work experience with you, and they are critically evaluating you as to how you adjust and adapt to all of the factors bombarding your business. However, most employees are resistant to change, and at times the words of Albert Einstein periodically cross your mind as he defined insanity as “doing the same thing over and over again and expecting different results.”
There are your personal, financial, and business goals that are being challenged everyday: creating a sustainable company with a viable predictable revenue stream, maintaining a steady marketing system that generates quality clients/customers “beating a path to your door,” and getting commitment and buy-in from your colleagues that nothing is constant but change. The metrics of economic value for your business are also being redefined.
So let’s substitute the word “change” for re-inventing. Every business is to some degree in a transformation process, and as the changes in our world accelerate with more technology, you need to be perpetually morphing. So where do you begin?
Let’s begin with the basics. It may be time to identify and assemble your key employees into a Strategic Planning Group. This task force is a core team of the organization’s leaders and is mandatory in the effective creation of a strategic plan. Some strategic questions you should all begin to answer are:
What business are you really in? What is your mission statement? Your Unique Value Proposition? Your vision statement?
We all remember the mission statement that you wrote a long time ago or never got around to recording on paper. Your organization’s mission is a definition of who and what you are. Mission statements often include core goals and values of the company or organization.
Too often you overlook the vision statement. The vision statement is simply a roadmap for the future. In a vision statement, you’re creating your vision for the preferred future of your company. Initially, the vision statement should be vaguely specific, negotiating with others to eventually create the path to the ultimate future.
The value proposition is another important statement the company may need to address. Wikipedia defines a value proposition as “a promise of value to be delivered and a belief from the customer of value that will be experienced.” Developing a value proposition is based on a review and analysis of the benefits, costs, and value that an organization can deliver to its customers, prospective customers, and other constituent groups within and outside the organization.
So as you begin to redefine what business you are in and to re-address these three statements, it may be time to perform a Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis.
A SWOT analysis must start with defining a desired end state or objective and may be incorporated into the strategic planning model. When you have completed the SWOT analysis, what are your conclusions? Why not do a SWOT analysis of your major competitor? Now compare the two. What makes you unique or distinct in the marketplace? What are your strategic advantages and how can you leverage your strengths and your competitor’s vulnerabilities?
Reinventing the mission statement, the vision statement, and the value proposition coupled with the SWOT analysis is time-consuming, and relevant to your business planning. It may be advantageous to review these strategic planning components on an annual basis.
So as you embark upon the journey of re-invention, keep the words of Steve Jobs ingrained in your thoughts:
Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. If you haven't found it yet, keep looking. Don't settle. As with all matters of the heart, you'll know when you find it.
Robert A. Valente, CFP®, AEP®, is CEO and Managing Member of RAV Financial Services LLC. He can be reached at email@example.com.