Understanding Value: A Customer-Focused Approach
Warren Buffett once said, “Price is what you pay. Value is what you get.” As a manager or executive, it is important that you understand and communicate the aspects of your organisation where your customers find value. As an employee at any level it is crucial these values reinforce what you do daily.
The best way to understand a customer’s perspective is to examine your own buying decisions. When making a purchase, you consider three critical factors: where to buy, whom to buy from and which brand. The answers to those questions result in the customer value equation.
Here are some ways to help you think about your own organisation’s value equation.
Supplier View – is how or where the client buys the product. The easiest or most convenient, the better. For example, McDonald’s is such a successful fast-food restaurant because it has so many locations and because it specialises in fast service.
Consultant Value – is whom we purchase the product from. Depending on what you purchase, you have varying levels of trust that you need to feel confident in your purchase. For example, all estate agents handle only one geographic territory and as a customer, you will have the same agent all of the time. They will help you deal with the complexity of an insurance claim.
Product Brand Value – is the brand name that you purchase. Many people rely on brand names to help them make their purchasing decisions. For example, Nurofen pain reliever is a very highly regarded brand and people continue to purchase it because they trust the product, even though there are less costly generic alternatives.
Take these three factors and apply them to your organisation. Add them up and you will have your organisation’s value equation. This practice will help you identify successes and areas where you can improve your customer experience. An improved customer experience will help your organisation succeed well into the future.
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