4 Myths About Customer Value
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The article "4 Myths about Customer Value" talks about customer service, it has been created by R.G. Srinivasan.
The purpose of business is to create and retain a customer.Much has been writetn about customer orientation, customer relationship management (CRM), Customer Lifetime Value (CLV) metrics, Customer Centric organization models, customer retention, customer care-add any high sounding word with -customer- preceding or succeeding that word and you have a new model, a new theory.
Headline hitting books, celebrity author seminars and training till a second theory comes along.And we see the poor customer is still the most dissatisfied lot (that includes all of us specialists too, as customers).What a manufacturer or service provider often thinks as a market or value proposition, customers respond in a diametrically different fashion. Why does it happen? While business thinks in terms of products and derived values, customer is looking at satisfaction. The key question is whether all the strategy, product features, add ons and vaule creation lead to ultimate customer satisfaction.Now that may seem a little contradictory. To illustrate it better let's take the example of Cell phone serviecs. Companies are rolling out a new product every fortnight offering more value, in their perspective.Then the point is why does the customer keep switching over to different service providers and products or packages so often, if the products are offering value.The key here is more value propositions are being rolled out without looking at the really basic. Whether the value proposed gievs satisfaction to the customers. If not it is not valuable.
The customer is buying satisfaction. Highest value is derived when the customer is fully satisfied with his purchase.Some common myths in Value CreationMyth # 1 More is often considered valueBuy one get one free scheems are rolled out. There is of course an instant slaes push. However at the end of the scheme the cutsomer feels that he had all along been paying 100% more for the products and perceives that really product as costly once the scheme is withdrawn. May switch to a second product at the same cost.
Conclusion: Dissatisfaction leads to value erosionMyth # 2 Price is valueMany business consiedrs lower cost as offering more value. More often than not lowest cost products end up as the second hottest with a higher priced product with similar product atrtibutes leading the market.
The simple reason is the higher cost product may be offeirng a higher satisfaction due to perceived values and imagery. Car markets are a prime example of that syndrome.Myth # 3 More Features or add ons are valuBeusinesses load a product or service with more features thus offering a higher value. While that may be attractive, if the features are not backed by adequate supports the satisfaction may be less and value is reudced.
We encounter that everyday.
A customer buys a product with many fetaures but not demonstrated properly or may not be serviced properly. Enquiries may not be hadnled effectively.
Airlines offering add ons like free overntie accomodation are still not favored if the services, like enquiry handling, reservations, and time schedules are poor. Cell phones companies may be offering plenty of add ons like national roaming or free incoming calls etc. However if the billing is poor and billing enquiries are not addressed properly the customer is dissatisfied and leaves the service for a second provider.Myth # 4 Products are competing with similar productsThis is often true in the leisure industry. A moive theatre may not be competing with a second movie theatre. If the customer is not satisfied with a theatre or movie he may look at options to other entertainment sources, for instance an amusement park. We may call them discrteionary time products.
Highest satisfaction levels are really important in that type of business.These are of the examples of how busniesses can go totally wrong in assessing value. While it is all good to talk of value creation thouhgt must go into the major ingredient in value that's the customer satisfaction.And are business really serious about customer retention.
As even a noivce to business knows it is far cheaper to service and retain existing customers.
The cost of acquiring new customer is really high.Now how many business have consumer satisfaction index to monitor that prime factor in csutomer value creationR.G. Srinivasan is founder of Born to Win Fourm.
He is a certified trainer and 0nline marketing promotions consultant.
Check out his webpages at http://venturelinks.Tripod.Com
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4 Myths about Customer Value
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