what does your customer value march 2017 v2

“What does your customer value..?”

Understand customer value so you can focus on what value to deliver and how to

communicate the value your customers desire...

1 © Mark Hocknell 2017 Customer Value

Get in touch: www.markhocknell.com

[email protected]

http://www.markhocknell.com/

mailto:[email protected]

Overview

• Customer Centric approach to Business

• Customer Portfolios and profit

– Customer spend and advocacy

• Business Alignment with Customer Intent

– Customer Groups

• Customer Value


The Customer Centric approach to Business

Reject the industrial age models and structures that are now superseded

Customer Value © Mark Hocknell 2017 3

Customer Centric Business

• Early commerce was relationship based

• Industrial age focused on making things – production and distribution

• Today:

– Digital Age

– Relationship Age

– Connection Economy

– Experience Economy


This signals a change.

We can’t keep using the industrial age business models

and thinking.

The customer centric approach to business is matched to this

new age.

The 5 Tenets of the Customer Centric approach to Business

1. Businesses exist for customers

2. It’s all about people

3. Not all customers are equal

4. Businesses are systems that deliver value

5. The need for progressive

improvement


Cu

sto

mer

Val

ue

B X C

===

Customer portfolios and profit

Customer spend and advocacy

The Two-way Value Exchange


Customer portfolios and value Key takeaways • Customer portfolio is the net sum value for the

business • Not all customers are equal

– In how they gain value from the business – Or in how they reciprocate value (spend/advocacy) – Correlation between the Two-way Exchange of value an

advocacy (positive word of mouth)

• Businesses embody the 80/20 principle • Customer portfolios are created by the business

– through implicit and explicit action – a focus on revenue or product sales only


Two-Way Value, feels like partnerships, connects with increased spend and

advocacy.

The Two-Way Value Exchange is the sweet spot


Value to the Business

Value to the Customer

• Revenue • Some profit • One way exchange • Customers feel like captives

• Cherry pick value • Price sensitive • Passive or Detractors

Your Awesome Customer

Business Alignment with Customer Intent

Businesses are systems that deliver value for customers

Customer Groups

Customer Value


Create Customer

Intent

Understanding Two-Way-

Value

Customer Groups

Delivery of Value

Experience and Process Management. Measurement and Improvement.

Alignment of resources: people, culture, communications, sales tactics, service delivery.

Value Proposition Development

What does each Customer Group value? What is the Value Proposition for each

Customer Group?

Phase One

Phase Three

Phase Two


The Three Phases that move you towards greater alignment

of your resources with your intent for growing a customer

portfolio of profitable promoters.

Phase One: Create Customer Intent

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Defining the customer groups:

• what are the different groups of customers • what defines one group from another • what attributes do they have • what do they value

Step 2 Step 1

• With Step 1 and 2

done we can then decide the intent for each customer group.

There are only seven choices, the key factor is to chose one

(maximum two) per customer group.

•Translation of the business strategy for the organisation into what the strategy means for each customer group • Describes the approach, principles and tactics • Identifies the value-delivery-systems

Customer Value © Mark Hocknell 2017

• Balance the delivery of value to customers with the needs of the organisation • Not all customer groups are equal • Define your customer strategies for each customer group


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Step 1



Customer Groups • Why not segments..?

• Customer Groups are different: – Potential Spend

– What they value

– How they define value

– How they buy

– How they spend

– How they promote


Example 1: B2B Construction Supplies

Price Bias

Service Bias

Parternship Bias

These customers are more focused on price than the

aspects of service or developing a partnership

This customer is more concerned with the aspects of service

than price

This customer is interested in developing

a partnership relationship and being

supported by our capability

Customer Value 14 © Mark Hocknell 2017

All these customer were then split into different groups based on the size of their business, monthly spend (wallet size).

Example 2: B2B Builders or Building Companies – all the same core needs

Who Characteristics

Mature Builder • Happy being on the tools • A few projects a year

Younger, Keen Builder • Wants to grow the business over the years • Knows and wants to get off the tools at some point

Small Company • Growing or okay where they are • Revenue around $2m pa • Still using Excel and accounting package

Large Company • Want to grow further • Revenue >$7m pa • Using software package, small team of estimators


The context of this offering is software to help the builder/company manage the integration of estimates and accounts, comply with ATO, Superstream etc.

Who are your customers • High-level groups

– Who makes up the market place for your customers..?

– Who (customers) are more likely to use your services/ products..?

• Are there any distinct groups of customers within a segment?

• What characteristics separate them?

• What is the buying / decision making process..?

Customer Value 16 © Mark Hocknell 2017

A few minutes to work on the handout.


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Step 2 • Balance the delivery of value to customers with the needs of the organisation • Not all customer groups are equal • Define your customer strategies for each customer group

Step 1

• With Step 1 and 2

done we can then decide the intent for each customer group.

There are only seven choices, the key factor is to chose one

(maximum two) per customer group.



So what is value for a customer..? • Often described as:

– An accountant saves the customer $5000 in tax and only charges $2000, therefore the value for the customer is $3000...

– The RRP on this product is $45, but you pay $27 therefore you save $18...


• These equations of value are too generic, simplistic...value is not just about dollars...

• Customers buy based on emotions, the rational communication of value is not the full story...

So what is the source of value..?

• Products

• Service

• Physical resources

• Communications

• Processes

• Price

• People

• Promotion

• Excellence

• Consistency

• Attention to detail

• Location

• Empathy

• Efficiencies

• Intimacy


How your customer defines value


Goals Results

Experience Community

Customers can define value through their goals, such as

“I want hassle-free business trip.”

...through belonging to a community or gaining benefits from a community they

belong to.

... perception of value is also dominated by the end-to-end experience the

customers have during the delivery of the goals or results.

... perceptions of value in terms of

the result or outcome.


Value for Customers: a function of the benefit we received

and the sacrifices we make

Value = Benefits Sacrifices

21 © Mark Hocknell 2017

What it costs the customer: • Time (search/service), Reputation, Dollars, Effort, Opportunity

Product, Service, Relationship: • Utility, Perceptions of Value, Features, Advantages, Functions, Outcomes/Outputs etc

Customer Value

Perception


Simple Value Examples - B2B

Customer Value

Cost of Ownership

Perceived Benefits

On-time delivery

Shorter lead times

Flexibility Lower inventory

Ordering costs

Stock-out costs

Account Mgt

B2C

Customer Value

Price

Quality

Product Features

Ease of Use

Meets my needs

Service / Complaints

Price

Savings

Lifetime costs


Example 3:Newspapers Understanding Two-Way Value

© Mark Hocknell 2017 25

Advertisers

Provide to Quest Want from Quest

• Revenue • Income • Margin

• To reach a specific audience • Clear advertising and messages to target groups • Goal: increase sales (or communicate with their target audience)

Customer Value

Example 3: Newspapers Understanding Two-Way Value

© Mark Hocknell 2017 26

Advertisers

Deliver value to Readers So that the Readers are engaged in the community paper, provide information about themselves in surveys... Balance content and advertising.

Deliver value to Advertisers by understanding exactly who the Readers are – the more detailed the understanding, the higher the premium value to Advertisers.

Conflict

Customer Value

Key Point Summary • The Customer Centric approach to Business has

superseded the principles behind ‘industrial age’ management

• Value for your business comes from your customer portfolio

• Know your awesome customer and the Two-Way Value Exchange

• Customers define value is various ways

• Understand what your customers value – can learn how to communicate and deliver this value


“What does your customer value..?”

Understand customer value so you can focus on what value to deliver...


Get in touch: www.markhocknell.com

[email protected]

WHY: • We are on a mission to rid the world of management thinking that belongs to the previous century • We are here to apply the tenets of the customer centric approach to business, and reap the benefits of higher profitability and engagement (with people – customers and employees) WHAT: • Workshops and engagements • Monthly email newsletter with key insights • Customer Centric Business on YouTube How: • Collaborative adventures in learning, consulting and coaching

http://www.markhocknell.com/

mailto:[email protected]