Posted tagged ‘customer value creation’

The 8 Principles of Customer Value Creation

September 9, 2016

To appreciate Customer Value Creation, you must understand the principles of Customer Value Creation. The principles of Customer Value Creation, enunciated by Gautam Mahajan are:

The 1st Principle: Customers tend to buy or use those products or services that they perceive create greater value for them than competitive offers. It is essential for executives and leaders to create higher value for their Customers than competition can.

 The 2nd Principle: Customer Value Creation is applicable in all fields, such as business, service, education and academics, society and government, social work, innovation and entrepreneurship. It impacts humanity.

 The 3rd Principle: Customer Value Creation touches all stakeholders, you, your colleagues, your employees, your partners (supply chain, delivery chain, and unions), and society to create resounding value for the Customer and thereby for the shareholder. It is the source for creating Customers and retaining existing ones, increasing loyalty, market share and profits

The 4th Principle: Customer Value Creation is proactively exceeding what is basically expected of you or your job and is going beyond your functional and routine roles to creating value in your eco-system. Value creation can be planned or spontaneous, and in both functional and emotional thinking

 The 5th Principle: Customer Value Creation leverages a person’s or an organisation’s potential, learning and creativity while making it meaningful and worthwhile for people to belong and perform, both physically and emotionally

 The 6th Principle: Customer Value Creation presents a very powerful decision making tool for companies to decide on actions, programs, strategies for the Customer that can increase the company’s longevity and profitability.

 The 7th Principle: Value Creation must exceed Value destruction or reduce negative value and be done consciously (not just unconsciously)

 The 8th Principle: Values (what you stand for, integrity, honesty, fairness etc.) creates Customer Value (that is Customers Value your Values)

 These principles form the foundation of the Customer Value Creation strategy and implementation, resulting in great value for you and your company.

 

Gautam Mahajan,
President, Customer Value Foundation and Inter-Link India

Founder editor, Journal of Creating Value jcv.sagepub.com
K-185 Sarai Jullena, New Delhi 110025
+91 98100 60368, 011-26831226
mahajan@customervaluefoundation.com
www.customervaluefoundation.com
http://www.interlinkindia.net

Twitter @ValueCreationJ

Customer Value Foundation (CVF) helps companies to Create Value and profit by Creating Value for the Customers, employee and for each person working with the companies.

Total Customer Value Management (Total CVM) transforms the entire company to focus on Creating Value for the Customer by aligning each person’s role in Creating Customer Value and getting shareholder wealth and Value.

Clearing Misconceptions on Customer Value

May 6, 2016

Here are some common ideas posted in blogs, and what is factually correct. The word Value is often misused and misunderstood. You can relate to some of these. These may help you in business or as a buyer.

  1. Satisfaction is the reason why people buy: People buy because a product or a service is worthwhile to them versus competitive products or services. Satisfaction is a necessary condition but not a sufficient condition for purchase. Sometimes, we buy even when very dissatisfied. An example could be a neighborhood petrol station, where we had a poor experience.
  2. High Value products have low satisfaction: This implies value is price, and that if something is high priced it has low satisfaction. This is confusing value for price. Sometimes, people pay “money for value” which means they buy high priced items. Thus if you buy a BMW, you can be very satisfied.
  3. Low Value products have high satisfaction: This implies value is price, and that if something is low priced it has high satisfaction. This is just not true. It has been proved that at every price point, Customers look for Value. What does that mean: If buying a pen, whether a Mont Blanc or a Bic, the Customer is looking for Value, and buys on Value. You may be very dissatisfied with a low cost ball pen, when it streaks while writing.
  4. Satisfaction measures Customer Value: Customer Value and satisfaction studies are different. Satisfaction measurements are done on transactions and generally right after the transaction by the user. Normally the top two boxes are measured. Customer Value studies are done a few weeks after the transaction and on the decision maker, not necessarily the end user, so as to get embedded perceptions. Customer Value studies are done versus competitive alternatives and are ratios. Thus a Customer Value study always compares you to competition and is not based on your score alone but their score also.
  5. Value means Benefits: Value is what the Customer gets (benefits) vs. cost (price and non-price) versus competing offers. While colloquially we use Value to mean benefit or price, Customer Value is the actual worth of a product versus competing options. Value in the Customer context is not just the benefits, but what you pay versus competitive offers.
  6. Values and Value are the same: Values are what someone stands for: ethics, morals, sustainability. Value is defined above. In fact, Values create Value.
  7. Customer Value is newer than Customer Experience: Both are old concepts. However, the formal usage is more recent. Customer Value as a discipline started in the 1980s with Ray Kordupleski and AT&T, and CX in the 2000’s. Customer experience, Customer emotions, Brand Value are all measured by Customer Value.
  8. NPS is a great measure of what the Customer perceives: NPS only answers a couple of questions on repurchase and recommendation. It does not portray what Customer thinks of the product and whether he has had a good or poor experience. NPS is better used with other Customer metrics

Why are these misconceptions propagated and misunderstood? My take is that most people tend to follow what they are told, rather than delving deeply into the actual meaning of, and truly understand how these concepts should be used. These concepts are used and understood loosely.

My suggestion to the lay reader is to truly understand what each of these terms means, how they are used, and how they should be used. Reflection from one’s own experience will show what I am saying makes sense. (Remember your favorite restaurant or airline, and if you are dissatisfied, will you stop using them?)

One reason why companies and executives are not truly becoming Customer–centric is that such loosely used and understood terms confuse companies, and do not give the Customer true insight into what will really help. Thus just measuring NPS and stating that it tells the company what to do is misleading, and will prevent the Customer from truly improving.

Executives and Consultants can lead this change in understanding.

Would love your comments and help. We are happy to help others in education and executive education on courses in Value Creation.

 

Gautam Mahajan,
President, Customer Value Foundation and Inter-Link India

Founder editor, Journal of Creating Value jcv.sagepub.com
K-185 Sarai Jullena, New Delhi 110025
+91 98100 60368, 011-26831226
mahajan@customervaluefoundation.com
www.customervaluefoundation.com
http://www.interlinkindia.net

Twitter @ValueCreationJ

Customer Value Foundation (CVF) helps companies to Create Value and profit by Creating Value for the Customers, employee and for each person working with the companies.

Total Customer Value Management (Total CVM) transforms the entire company to focus on Creating Value for the Customer by aligning each person’s role in Creating Customer Value and getting shareholder wealth and Value.

How Net Promoter Score is Like Global Warming

April 18, 2016

Scott Broetzmann, President of CCMC has written a brilliant piece on NPS. It is given below. For those of you using NPS, this article may make you re-think:

“Some have suggested that global warming’s “murky consequences aren’t vivid enough to impress our distracted brains.”

And so it is with many omnibus corporate customer experience metrics like the Net Promoter Score (NPS). These oversimplified measures are all too often failing to embolden leadership to act on the impending doom and disaster that accompanies a mediocre customer experience.

Addressing the fatal flaws of an orthodox NPS approach is simple but not easy; NPS can be supplemented by the use of three corrective “measures.”

The three compensatory analytical techniques include:

  • The Market Damage model
  • A proper key driver and sensitivity analysis
  • A commitment to formal action planning

The MDM effectively offsets each of the three weaknesses of an NPS-only approach. Specifically, the MDM:

  1. Identifies specific problems in each phase of the customer experience that cause damage.
  2. Facilitates the identification of the cause of problems and accountability for action.
  3. Quantifies the revenue and word of mouth damage of the overall level of problems (think temperature or CO2 increases in the global warming analogy) and of each individual problem in a manner that is credible to Finance and Marketing.

A Proper Key Driver & Sensitivity Analysis: When executed properly, key driver analysis (the methodology for identifying what matters most) is central to getting executive attention. Executives care less about “what’s important” and care more about an understanding of what can be learned by effectively acting on things that matter.

Assuming that the ultimate goal of any survey is to contribute to a positive, incremental and sustainable improvement in the customer experience, action planning is the magic elixir to bring about this outcome. It is the antidote to complacency.

As we define it, action planning is the intentional and ongoing process of identifying, operationalizing, and implementing specific actions that affect enough customers, over a long enough period of time, to increase positive ratings for those selected elements of the customer experience that yield the greatest payoff.

It would not be difficult to argue that NPS and related omnibus metrics have helped propagate a certain customer experience groupthink. The “magic” of NPS has fostered the evolution of a virtual and overly cohesive group of corporate decision makers which believes itself to be infallible or invincible when it comes to the customer experience. In many cases, nothing could be further from the truth. In such cases, it’s more likely that no one is paying attention to signs of impending customer doom because they lack the right data and processes.”

Would love your comments and help. We are happy to help others in education and executive education on courses in Value Creation

 

Gautam Mahajan,
President, Customer Value Foundation and Inter-Link India

Founder editor, Journal of Creating Value jcv.sagepub.com
K-185 Sarai Jullena, New Delhi 110025
+91 98100 60368, 011-26831226
mahajan@customervaluefoundation.com
www.customervaluefoundation.com
http://www.interlinkindia.net

Twitter @ValueCreationJ

Customer Value Foundation (CVF) helps companies to Create Value and profit by Creating Value for the Customers, employee and for each person working with the companies.

Total Customer Value Management (Total CVM) transforms the entire company to focus on Creating Value for the Customer by aligning each person’s role in Creating Customer Value and getting shareholder wealth and Value.

Are Companies Loyal?

December 29, 2015

I came across a cartoon at Economic Times, which showed two executives speaking and one saying:

It’s no more about employee loyalty… try winning company’s loyalty…

It got me thinking. Should a company be loyal? Can a company be loyal? To whom? I quickly googled, and there was hardly anything on a company’s loyalty.

The first question is an easy one, a company can be loyal.

Should a company be loyal is more complex, till we answer the question to whom.

I guess we have to scroll through the stakeholders: Employees, customers, partners, shareholders and society. The easy answer is that a company should be loyal to all of these. If this is true, then we have to ask are most companies you know loyal, and to whom? Are companies you buy from loyal to you? I have found that whenever we as Customers have been good and fair to our suppliers, they tend to be more loyal to us than to other customers who are not as fair or good to them.

I would imagine most companies tend to be loyal to their major shareholders. They generally show their loyalty to the shareholder by offering him what he wants most: dividends, stock price, long term growth and market leadership. I suspect most shareholders want either dividends or stock price growth. Thus the loyal management works on these aspects.

Are companies loyal to employees? Is this loyalty secondary to the loyalty to shareholders? This makes us think of the Japanese lifetime employment system (only 8.8% of Japanese companies have this now). There were three models: Stationary (governed by a set of rigid rules, and the expectation that some non performing employees would voluntarily leave), Growth (depends on organisational growth, and all grow with the organisation), stagnant (where the company when in bad shape let’s employees go) …Assuming employees were given life time employment, what value was this loyalty? Apart from a somewhat guaranteed employment, this system did not allow employees to easily switch and they became captive employees. Was company loyalty good for employees?

Outside of Japan, I am sure there are examples of companies being loyal to employees. I cannot think of many. We also notice that companies work on making employees loyal. One way is to make the employee feel indispensable. Or by giving golden handcuffs…If you leave you will be worse off or lose bonuses, or stock options.

The less said about true loyalty to customers. As long as the customer can be milked (can buy), he is worthwhile. In this instant gratification society, even this is short lived. Also, as I mentioned earlier, there is some loyalty to customers who are good to them.

I had written about company loyalty to suppliers, and that too is minimal and based on the benefit to the company (sometimes called mutual benefit). This loyalty is generally purchasing department led, though it is true mutual bonds between the supplier and the end user in the company do form.

The company’s loyalty to society and to sustainability has yet to be proved. There are examples of Unilever and others who are trying to be loyal to the environment and sustainability

So, the company is loyal to the Owners…in reality!

How can they change or be otherwise. Others have written that the company has to think of itself first. I think this is true for survival (first put the oxygen mask on yourself, and then on the kids…but not put the oxygen mask on yourself and abandon the kids). So instead of abandoning the other stakeholders, companies try to sustain them to the extent their loyalty to the owner will let them.

Many Customer consultants would want the company to be customer-centric. Does that include company loyalty?

I think company loyalty and customer-centricity is a thought process and requires enlightened owners, and enlightened managers, who look beyond profit being the purpose of a company.

Would love your comments and help. We are happy to help others in education and executive education on courses in Value Creation

 

Gautam Mahajan                                                                                                              Founding Editor, Journal of Creating Value,

President-Customer Value Foundation
M: +91 9810060368
Tel: 11-26831226, Fax: 11-26929055
email: mahajan@Customervaluefoundation.com
website: http://www.Customervaluefoundation.com

Customer Value Foundation (CVF) helps companies to Create Value and profit by Creating Value for the Customers, employee and for each person working with the companies.

Total Customer Value Management (Total CVM) transforms the entire company to focus on Creating Value for the Customer by aligning each person’s role in Creating Customer Value and getting shareholder wealth and Value.

Customer and Value Migration

October 14, 2014

Your Customers move where they perceive they get better Customer Value, causing your company Value to migrate to competition

Step1: The Company does something to reduce the value they deliver: by increasing price, making it difficult to buy or maintain or get service, or reduce product features. They reduce value to Customer.
Step 2: Customer Value Migrates to (is better at) your Competitor.

Step 3: Customer starts to look for better Value.

Step 4: Customer Migrates to your Competitor.

Step 5: Value (profits/returns/sales) Migrates to your Competitor

Why do some Customers migrate? And why don’t others?

Many Customers remain with a company because of convenience and inertia. They are just too lazy to move. Just because they stay they are not essentially loyal.

And loyalty is not necessarily a long term or a lifelong phenomenon. Loyalty has to be gained and maintained by providing higher Customer Value.

And as your competitors start to provide better Customer Value, there is consequent Customer and Value migration away from your company towards competition.

In 1996, Adrian Slywotzky described Value migration. Bala V. Balachandran in a 2007 article, Customer Centricity Drivers: Driver for Sustainability Profitability cautions that failure to keep up with Customer Value migration is a key reason for a reduction in the performance of a company

Value Migration of Customers happens because your business model is outmoded and Customers are finding companies which create more Value for them and probably through a better business model.  The competing Value-creating forces have moved beyond your company’s offerings.

And Marketing strategy, according to Adrian is the art of creating Value for the Customer. This can only be done by offering a product or service that corresponds to Customer needs. In a fast changing business environment, the factors that determine Value are constantly changing.

A business model describes the rationale of how an organization creates, delivers, and captures Value

We have seen the shift from land lines to cell phones

From teletype to fax to email/scans

From full fare to discount airlines

From Lotus 123 to Excel

The various storage and replay devices, spool tapes, cassettes, video tapes, floppies, CDs, iPod, Pen drives

Thus Value can flow between industries, between companies, and within a company. And this happens in stages.

Value can be absorbed by different industries or companies, iphone and the Samsung clone (the inflow stage). Then there is a Value equilibrium stage where there is some stability. And as companies fail to innovate and move ahead and do not create Customer Value there is the Value outflow stage.

Since we are looking at the Value your firm creates versus competition, Customer Value Added is always relative. This is a necessary measurement for you to make.

Unfortunately marketing and CXO thinking is focused more on acquisition, and sometimes retention. But the Customer is growing, evolving and changing. He graduates from being a student to an earning member of society and acquires a family and affluence. His needs are changing, and just trying to get him to remain loyal is not enough. How do we get him to buy the things he was never buying before? Or he will migrate.

And more importantly, when he migrates you might ignore him. That is why your data has to show when a person moves from being a heavy user to an influencer and a light user. Take someone who stays in a hotel chain and acquires titanium status and then gets promoted and travels less, but influences the use of the chain within his company. But he is ignored because he no longer is a heavy user of rooms!

Therefore beware when you reduce Customer Value. It will hit you because as your actions reduce Customer Value, you are causing Customer Value to migrate to your competitor, and consequentially Customers migrate and Value migrates with them away from you. Be careful when you reduce Customer Value. You might be reducing your profits!

Your comments are welcome!

Gautam Mahajan, President-Customer Value Foundation
M: +91 9810060368
Tel: 11-26831226, Fax: 11-26929055
email: mahajan@Customervaluefoundation.com
website: http://www.Customervaluefoundation.com

Customer Value Foundation (CVF) helps companies to Create Value and profit by Creating Value for the Customers, employee and for each person working with the companies.

Total Customer Value Management (Total CVM) transform the entire company to focus on Creating Value for the Customer by aligning each person’s role in Creating Customer Value and getting shareholder wealth and Value.

Long Term Strategy Creates More Shareholder Wealth Than Short Term Results

October 4, 2014

To Create more Shareholder Wealth, would you Focus on the Short Term?

The CEO has to think whether Value Creation is a flawed concept, particularly as it places the customer and employees ahead of the shareholder.

This concept implies that doing good things for employees and customers not only makes excellent common sense but also creates more long term value for the company and ensures its longevity.

Fortunately many CEO leaders are supporting the Value Creation belief through thinking about Conscious Capitalism.

Recently thought leaders are questioning the concept that has been drilled into CEO’s minds that value creation for shareholders is their goal. Not only that, this goal has to be achieved in the short term, and long term thinking has to take second place in the CEO’s thinking.

Many people have come out against this thinking.

These include Lynn Stout, Professor of Corporate and Business Law at the Clarke Business Law Institute at Cornell Law School, John Mckay once CEO of Whole Foods and Paul Polman, the Chief Executive Officer of Unilever.

John McKay coined the phrase conscious capitalism.

He states that while it is essential to make money, the company has a higher purpose, and this purpose goes beyond profit. The purpose could be creating value for society, and the company’s stakeholders: ‘They understand that their role is to serve the purpose of the organization, to support the people within the organization and to create value for the all of the organization’s stakeholders’.

Yaz Ishitaka, formerly with Toyo Seikan in Japan, said when you ask whom does the company work for, one of the answers will be for society (as tax payer), for customers who provides the means of life, and for employees. Need not to hurry but conclusively, the most important key is who provides the source of wealth to sustain corporate and individual life, customer is it.

Paul Polson, talks about today’s capitalism and how it has to be flawed, when it cannot be inclusive, when the poorest 3.5 billion people make less money than the richest 85 people, 1 billion people go hungry and we use 1.5 times the resource availability in the world. Do we wonder about sustainability?

Lynn Stout talks about value destruction for employees, taxpayers and society, but shareholders too through a relentless focus on share price which can hurt not only the shareholder but also the enterprise. Instead of thinking the purpose of a corporation is to create and delight customers, it seems CEO’s think the purpose of a customer is to increase shareholder wealth.

Lynn calls this “shareholder capitalism” which is robbery.

She says companies have to think of enterprise prosperity versus profit of shareholders. Hence customers have to be nurtured and must be at the center of the firm for the sake of the enterprise!

Conscious business is similar in thinking: Conscious Businesses focus on their whole business ecosystem, creating and optimizing value for all of their stakeholders, understanding that strong and engaged stakeholders lead to a healthy, sustainable, resilient business.

They recognize that, without employees, customers, suppliers, funders, supportive communities and a life-sustaining ecosystem, there is no business. Conscious Business is a win-win-win proposition, which includes a healthy return to shareholders.

During the last century as capitalism concepts grew, for the most part the professional manager viewed himself as a caretaker responsible for taking large public enterprises towards crating benefits for shareholders, employees, customers and society.

Unfortunately linking managerial wealth to short term profits has changed some of this thinking.

Lynn Stout talks of short term gains that have harmed companies. She cites that in the name of increasing shareholder value, public companies have sold key assets (Kodak’s patents), outsourced jobs (Apple), cut back on Customer service (Sears) and research and development (Motorola), cut safety corners (BP), showered CEOs with stock options (Citibank), lobbied Congress for corporate tax loopholes (GE) and drained cash reserves to repurchase shares until companies teetered on the brink of insolvency (much of the financial industry). Some corporations even used accounting fraud to raise share price (Enron and WorldCom).

Public companies employed these strategies even though many executives and directors felt uneasy about them, sensing that a single-minded pursuit of higher share prices did not serve the interests of society, the company or shareholders themselves.

Thus short termism harms shareholders!

In fact corporations are legal entities, with shareholders having a contract with the corporation as owning share of the stock.

The corporation must fulfill its higher value creating purpose. And for this they need a Conscious Culture that fosters love and care and builds trust between a company’s team members and its other stakeholders.

Conscious Culture is an energizing and unifying force that truly brings a Conscious Business to life. Polman talks about the change in the shareholders as Unilever moved towards long termism. Stock price volatility reduced, and long term prices increased.

Lynn Stout states that it is time to recognize that the philosophy of “maximize shareholder value” is just such a defunct economist’s idea. Let’s throw off our intellectual chains so our corporate sector can do a better job for shareholders — and the rest of us too.

This according to Polman requires different leaders requiring skills such as the ability to focus on the long term, to be purpose driven, to think systemically, and to work much more transparently and effectively in partnerships.

He reiterates that long term thinking gives increased profits, and it also means you have to work to annual goals and meet them over the long term.

Sustainability, like not buying products from companies that rely on de-forestation to produce edible oils is a stand taken by many companies.

This focus on sustainability is reaching a critical mass that will reduce deforestation and improve the eco-system.

This is an example of a higher purpose of an organization.

So the CEO has to decide whether his role is to make short term profit to the detriment of everything else.

He has to determine if his bonuses are more important than longevity.

He has to decide whether he is good enough and smart enough to create value for all stakeholders while expounding a purpose for the corporation leading to long term growth and wealth.

You have to create a company culture as Zappos did.

Culture is about purpose. Culture means that the employee and customers come first. It is about building a relationship with employees and a Like-Like experience for the customer (all positive).

Polman says people are proud to work for companies with a purpose and the culture that employees, customers and sustainability come first, and they love a company that is prepared to make a difference and improve the quality of life…

If it works for Zappos and they grew exponentially with the employee/customer culture, so can you.

Your comments are welcome!

Gautam Mahajan, President-Customer Value Foundation
M: +91 9810060368
Tel: 11-26831226, Fax: 11-26929055
email: mahajan@Customervaluefoundation.com
website: http://www.Customervaluefoundation.com

Customer Value Foundation (CVF) helps companies to Create Value and profit by Creating Value for the Customers, employee and for each person working with the companies.

Total Customer Value Management (Total CVM) transform the entire company to focus on Creating Value for the Customer by aligning each person’s role in Creating Customer Value and getting shareholder wealth and Value.

Whom do I work for?

September 25, 2014

If you work for a company, whom do you really work for? Or whom should you really work for?

Ask an executive this question and the answer will be for the company or the boss. However, when you dig deeper, we find that executives and employees typically think of the three main pillars of a company

The investors (represented by management)

The customer hopefully represented by you (the employee) and the management

The employees (managed by the managers)

If you were in Japan you would have said you worked in a family, the family being your company. This system was based on three precepts, lifetime employment, seniority-based wages, and enterprise-based unionism. To these, a fourth precept was later added: community consciousness within the company, one based on vertical relationships, reciprocal obligations, and decision-making by consensus.

However, in the Western world, we have to decide whom we work for.

Today, it is becoming clearer than ever before that we really should be working for the customer. But the reality is we work for our bosses.

In a survey, we found that 90% of the employees said the customer comes first, and managers should work for customers and employees. Managers, on the other hand were evenly divided on the investor and the customer coming first.

Perhaps there is one more pillar we should work for. This fourth pillar is ourselves.

Thus working for ourselves (looking out for oneself), or creating value for ourselves should become an important part of our thinking.

If management is focused on adding value for the employees, then this fourth pillar all but disappears, or becomes a smaller aspect.

So let us re-ask:

Whom are we working for? Investor, Customer or Employee

Thought 1

Does the customer really come first to you or are you just saying this because this is the fashionable (politically correct)?

Ask yourself, when push comes to shove who comes first the company (read investor) or the customer; or the boss or the customer?

The answer is pretty obvious.

Then why do we pretend? Or are we forced to pretend? Or is the company not truly in sync with the customer? Or is it mouthing the right words but doing the wrong things?

Thought 2.

Maybe some CEO’s and executives will say all three, employees and customers and investors are equally important. Maybe they are symbiotically attached and one cannot function in the absence of the other? Or the three are the necessary pillars and the foundation for success (however described).

If you believe this, then you have to ask if truly you are not veering towards one or the other.

You have to ask if you have independent programs focusing on each one of these pillars.

Will this continue even when there are problems with one of the pillars (or focus, and generally on the investor).

So the moment financial results falter, the focus on employees and customers, goes away, the spending and effort on customers and employees is reduced.

So one pillar is favoured over the others.

Why? Does the investor think he is most important? Or is it the CEO deciding that he must focus on the investor to get his bonus? Or is it because the investor does not get proper and sufficient data on employee and customer assets? Or that the CEO does not have this data?

And therefore the investor and the CEO thinks customer and employee data are not as important as financial data?

You, CEO’s and investors have a lot to learn and do! If you don’t you will not change, and will not create value. You have to start looking at your company culture as Zappos did. Culture is about purpose. Culture means that the employee and customers come first. It is about building a relationship with employees and a Like-Like experience for the customer (all positive).

If it works for Zappos and they grew exponentially with the employee/customer culture, so can you.

Whom do you work for?

Your comments are welcome!

Gautam Mahajan, President-Customer Value Foundation
M: +91 9810060368
Tel: 11-26831226, Fax: 11-26929055
email: mahajan@Customervaluefoundation.com
website: http://www.Customervaluefoundation.com

Customer Value Foundation (CVF) helps companies to Create Value and profit by Creating Value for the Customers, employee and for each person working with the companies.

Total Customer Value Management (Total CVM) transform the entire company to focus on Creating Value for the Customer by aligning each person’s role in Creating Customer Value and getting shareholder wealth and Value.

Training vs. Mind-set in Value Creation

August 29, 2014

What we want to create is a H2H environment in our company and with our customers and partners.

Is it the mind-set or the training that is more important to our Customers and in Value Creation?

While both are extremely important, I believe mind-set changes are overlooked, not because they are not important, but because conventional training does not focus, indeed is not capable of changing mind-sets. Often it is said training is for dogs (sit, bark, roll!) and education for human beings. Mind-set changes are best impacted by self-introspection.

Why do customers get angry? Why are they happy? What is my role in the customer behavior? Realistically, to change mind-set, we must first build the self-esteem of people.

Once we have done this, we will find they are more open to ideas.

Then, we have to build their awareness, which will allow self-evaluation, and self-improvement.

Once we have done this, we can embark on a Continuous Customer Improvement Program (CCIP) led by front facing employees, not executives. We also let the front end employees examine the Customers Bill of Rights. We ask them to comment on how they will ensure this will work and what support they need.

For making this happen, we start Customer Circles, which are led by front facing employees working with Customers and on the CCIP.

During the Customer Circle sessions, these employees will also figure out how to keep the promises made by the company and its Bill of Rights (and also by the employees).

This leads to massive mind-set changes and taking over of ownership of the Customers by the employees. This also means a change of mind-set of the bosses, to let go and instead of always telling people what to do and training them. The bosses then let the employees tell them what the employees are going to do and what help they need from the bosses.

(As an aside, people are more likely than not, told what to or not to do.

As children, we are told not to reach for the cookie jar, we are told to wipe our faces, not to put our elbows on the table, not to talk with our mouths full, to eat the spinach, and, and, and and. This continues in school, when teachers tell us to stand up and say ‘Good Morning, Teacher’, or to do our homework.

Being told what to do continue at work.

Our boss says you will see four customers today. Why would you see a fifth Customer if you had time?)

As mind-set changes occur, we also have to ensure that the employees understand the mission of the company and whether they understand the importance of and how the mission can guide them.

Earlier, I mentioned that for executives to work on mind-set changes, they too have to change, and learn to let go, and let the employees handle Customers. The executives have to learn that they have to stop directing and ordering (and saying thou shalt…), but actually providing a supportive platform for the employees to perform.

Another reason for not working on mind-set changes is that we tend to manage what we measure….the tangibles.

We have difficulty in working on intangibles because we cannot measure them. We have to learn what is important to Customers, not measure only things that companies wish to measure.

What does a Customer want from a billing process? Accurate bills that are easy to correct if they are not accurate. What does a company wish to measure? Are the bills being paid, and Past due payments. These do not measure the Customers concerns. Worthwhile to measure is percentage of wrong bills, and percentage corrected in one call.

Chip Conley (founder of Joie de Vivre Hotels and author of the New York Times bestselling, EMOTIONAL EQUATIONS) uses the Maslow hierarchy to describe this. He believes Survival, Success and Transform is the Maslow for the corporation. Transform leads to mind-set changes. I believe at Customer Value Foundation, that success often means doing your job and Value Creation means going beyond your job to transform.

I have a number of stories of wonderful experiences in airlines and hotels and in other service renditions and I also have a number of horrible stories. I am sure you, the reader has similar great and horror stories.

Why is there no consistency? Is it the training or the mind-set? I believe with mind-set changes, the number of horror stories will go away. The routine experience we get as Customers is based on training. But when there is a crisis mind-set has to creep in.

Top on my horror stories is when employees feel that their role is to protect the company. The company is always right.

And so they lie. They say that (not in so many words) it is not our fault (implying it is the customers fault). Horror stories include not wanting to help the customer especially during crises hiding behind policies and rules.

An example is when I was downgraded in Brussels on a flight from New York changing planes in Brussels for Delhi, I was told we do not know the rules for a partial refund for a downgrade! Or when we want your money for a flight, you have to pay at once (and no refunds) but when we have to refund, our rules are 30 days.

Don’t companies know this is not right? Do they care or don’t their mind-sets allow them to change?

Customer service departments are trained to solve a customer’s problem. When they solve a less than usual problem, their mind-set does not allow them to initiate a systemic change so that future customers will not face the same issues. Examples of Tata Sky when you want to change an annual plan, you cannot do so without closing and reopening the account. Why can’t their system allow the change of a set box serial number? For or without a fee?

But these companies feel they have a customer centric mind-set, and the Customers do not agree. In fact 56% of all companies feel they are Customer centric and only 12% of Customers agree. Whose mind-set needs to be changed?

One mind-set I wish to change in companies is to get to Zero Complaints.

Executives are ‘trained’ to believe that Customers will always complain and so they cannot move to Zero Complaints (or at least attempt to get there).

They are trained to forget they too are Customers, and training transforms them from being Customers and behave like and become executives! The executive mind-set is often not a Customeric mind-set. And if they start to think like Customers, the conversation they will have is Customer to Customer, not B2C.

Most of us will agree It is true that intangible of happy employees builds the tangible of business success. Moreover while we cannot always make everyone happy, we can set the environment and mind-set to try to make everyone happy

What counts?  H2H: human to human!

Your comments are welcome!

Gautam Mahajan, President-Customer Value Foundation
M: +91 9810060368
Tel: 11-26831226, Fax: 11-26929055
email: mahajan@Customervaluefoundation.com
website: http://www.Customervaluefoundation.com

Customer Value Foundation (CVF) helps companies to Create Value and profit by Creating Value for the Customers, employee and for each person working with the companies.

Total Customer Value Management (Total CVM) transform the entire company to focus on Creating Value for the Customer by aligning each person’s role in Creating Customer Value and getting shareholder wealth and Value.

People know the Price of Everything and the Value of Nothing

August 27, 2014

Oscar Wilde said this over 100 years ago: ‘People know the Price of Everything and the Value of Nothing’. Seems like people know more than price, they know the value or benefits from a company or a product (thanks to the information revolution). Marketing is frozen in time and continues to think all people care about is price and so they say price is everything, value is nothing and work on reducing price (and if lucky, costs). Thus the emphasis on price and not on value creation. Your take? 

Your comments are welcome! 

Gautam Mahajan, President-Customer Value Foundation
M: +91 9810060368
Tel: 11-26831226, Fax: 11-26929055
email: mahajan@Customervaluefoundation.com
website: http://www.Customervaluefoundation.com

Customer Value Foundation (CVF) helps companies to Create Value and profit by Creating Value for the Customers, employee and for each person working with the companies.

Total Customer Value Management (Total CVM) transform the entire company to focus on Creating Value for the Customer by aligning each person’s role in Creating Customer Value and getting shareholder wealth and Value.

Customer Value Journey

May 22, 2014

Making the Journey Easy and Meaningful Creates Value

I gave a two day workshop on Value Creation Mapping in Malaysia in April 2014. I found that the concept of value was interpreted differently by different participants. Very few said it meant whether what you got was worth what you paid and versus competitive offers. Most confused value for either benefits or value for money or price. Value is actually a juxtaposition of benefits and price.

I also explained that while we think of the Customer Journey as one journey, it actually has to be viewed as three journeys by the company to be able to make the Customer’s journey more comfortable, and an enriching experience.

The first part of his journey and the experience is in searching for a product, shopping, buying, taking delivery, or having it delivered, the delivery and installation process (including self-installation), actual use experience, complaint experience, experience of getting something unusual done, getting a call back from the company, billing and payment, maintenance and service etc.

The second is the journey that the company makes to the customer, when contacting him for giving information, for getting the customer to buy, for order information, service information, for collecting bills etc. Is this journey that the company makes to the customer a comfortable journey or experience for the customer? Is it comfortable for the company? Does the company have enough information while making a call? How often do you get a call from a service guy asking for your address, and the model of your TV? Or when you get repeat calls for buying. Or after you have bought, someone calls you and says when will you buy?

Companies do not view this as a part of the customer journey, and often irritate the hell out of the customer and even aggravate the customer.

Lastly, there is the journey the company people make within the company for solving the problems of the customer and to make the customer journey comfortable. How often do you hear, as a customer from the company, this is not my department, you will have to call so and so. The company is palming its journey off onto the customer and making the customer embark on a fresh journey.

I just got a call from Citibank cards asking for my date of birth to check a statement (why?). I asked the girl to contact my branch manager whom I had sent all the information by email. She could not or would not. Could I call him to send her the information?

Companies delegate their work onto the customer and make him take unnecessary journeys, because the convenience of the company (or its executive) is more important than the convenience of the customer.

All these are Value Destructing. It is important that the companies use these journeys to Create Value for the customer, but this is not taught, this is not part of the culture. Too bad, Mr Customer!

The lessons:

The journey itself cannot be separated from the culture of the company. Are we inwardly focused or do we want to take in the needs of the customer and reduce his pain in the journey and increase the Value Creation, his sense of wellbeing, happiness and even delight? Is that your culture? If yes, why do these journeys happen in a way to cause some grief to the customer?

Creating Value in the Journey should be the cornerstone of the culture and the people.

To do this, a clear understanding of what Customer Value is and how to measure it through the Customer Value Added metric

(CVA) =       Value added by your company to your customers

                    Value added by your competitors to its customers

Last but not least, build a Customer Strategy, and break silos and build a Circle of Promises, so that the customer gets a seamless, fulfilling experience during the journey, so that he becomes loyal.

Your comments are welcome!

Call at (+91) 9971288580

 

Gautam Mahajan, President-Customer Value Foundation
M: +91 9810060368
Tel: 11-26831226, Fax: 11-26929055
email: mahajan@Customervaluefoundation.com
website: http://www.Customervaluefoundation.com

Customer Value foundation (CVF) helps companies to Create Value and profit by Creating Value for the Customers, employee and for each person working with the companies.

Total Customer Value Management (Total CVM) transform the entire company to focus on Creating Value for the Customer by aligning each person’s role in Creating Customer Value and getting shareholder wealth and Value.