Some weeks ago, I wrote a piece about a fantastic experience I had at the Four Seasons Hotel in Mumbai. It was about creating great customer experiences. My friend Rohit Shipstone commented on it, and I thank him for it, because he said its not just about the experience, its about creating value. So I thought a great deal about it, and came up with the following. Thanks Rohit, hope you, and everyone else, likes this.

The thing about value is if you can create it for your customers, you’ll always be in business. The trouble is, it’s not tangible. It requires 2 parties to create, and you’re only one of them. The other one is the receiver who must perceive it as value. Of course, your product or service is at the heart of your offer, and that’s probably why you’re talking in the first place. But it’s likely there are many others who provide similar things. So why should an informed customer pay you money for your product or service, and not somebody else? Chances are, if they paid you, they liked something you did. That feels great, doesn’t it? Just imagine if a lot of people like something you do and are willing to pay you for it. How would that feel? Awe-fricking-some! But for that to happen, you would have to know what kind of people like things about you, what those things are, and how you will deliver them.

The other thing about value is, it’s not permanent. Once your customers get used to what they value about your product or service, it becomes a standard offering. For example, people need public transport. So you have buses, trains and cabs. Great. But then you got used to them. Picking on cabs for instance, once you had them, you wanted air conditioned ones. Once you had those, you wanted to get away from the hassle of finding one on the street or calling for one. So now you have app based services like Uber. Then they gave you multiple options for pricing, comfort, sharing and such things. We’ll get used to that pretty soon. They’re currently busy expanding that value with shuttle services, motorcycle cabs etc. but then what? Either they’ll get into a price war, or they’ll cartelize, or they will create more value. The ones that create new value, add value to what they offer, or enhance quality will sustain, the others will struggle.

Customers have to choose someone

Fundamentally, if a customer needs something, they’ll go looking for it, and eventually, they’ll find something they like. Amongst others, the main things they’ll be looking for are

1. Who can fulfil my needs?
2. Are they reliable and trustworthy?
3. How will they add value to my business?

Most people get stuck on the first point. That’s why there are endless comparisons on feature benefits, RoI, pricing and the regular stuff we deal with on an everyday basis. Add to that the credentials presentation and you’re still only addressing about half the issue. All of that is important, and must be done. But there’s a lot more.

I’d be surprised if customers will start trusting an organization only because they deliver a great credentials presentation. Don’t expect people to trust you based on your credentials alone. At the most, you will give them some useful information. That’s just the beginning. The customer will most certainly look for intent and commitment before they will trust you enough to do business with you. While commitment is more obvious – do you keep the promises you make – intent is different. The thing about intent is that you can’t fake it. So you have to prove it. Also, your intent must match the client’s need. I mean, if your intent is to secure the sale, it may be good intent for you but your client may not find it as good as you do. They would want to see your intent towards their needs.

Eventually customers are likely to lean towards someone who can create value for them. In simple words, if everyone competing for the clients business is offering similar products, what would prompt the customer to pay one and not the others? One example is why you go to a multiplex to watch a movie and not to one of the older theatres. After all, the price of tickets in multiplexes is 2 times that of the old single screen ones. The movie is the same, isn’t it? So why do you pay extra money for the same product? They offer you what you value, that’s why. It is not about the price then, but the demonstrated value the multiplex gives you.

In the absence of value being established in the customer’s mind, good luck with your feature comparison and price negotiation!

Are you thinking as they are?

So I guess you’ve got to take an outside in view of this thing, i.e., its less about what you have, and more about what the customer needs. This often requires a mind-set change. Mind-sets are powerful things. They’re the things through which our thoughts are filtered. They could be rooted in our culture, or something profound we were exposed to, or our past experiences. Once our thoughts are formed, of course, the sequence of action and results takes over. So it is important to consider a few things

1. What is your anchor?
2. The customer first mind-set
3. The value creation mind-set

The main issue to ponder is, what is your organization’s anchor? Many, in fact, most organizations, tend to anchor on their products and solutions. Everything is seen through the lens of the anchor. For the longest time, that anchor for Microsoft has been Windows. It was a winning approach through much of the 1980’s, and even the 1990’s. But it was far less compelling in the Internet world. Later, with the advent of Smart Phones, it rendered a powerful company like Microsoft irrelevant in that segment of the market. But worryingly for Microsoft, that segment is now an order of magnitude larger than the PC market for application development, content consumption, and increasingly for content creation. Isn’t that the business Microsoft is in? Recent announcements by the company, most notably the one about Microsoft moving its focus from Operating Systems to customer experiences are already getting positive market response, because those who created new and enhanced customer experiences in the new age technology businesses are the ones who have created value in the last decade and a half.

One company I worked with a great deal had predominantly inside-out thinking. Their perspective on customer needs was therefore driven mostly by what was going on inside their company, and not by the customer. For instance, in many cases where there were delays in deliveries, or responding to support calls, their thoughts were governed more by what they needed to improve within their company and less by what the customer required at the time of the crisis. Not surprisingly, they ended up seeing the problem the way they defined it, and acted accordingly, often with unintended consequences. Basically, a delayed delivery can be looked at in two ways. The internally focused view may tend to define the problem as process inefficiency. They would consequently consider solutions to improve internal processes and create better systems. The customer focused view may define the problem as a daily revenue loss to the customer. The urgency and solutions from this point of view would be different. I believe if the external view prevails, the urgency will be far greater, and the solution would get resolved where the problem is.

So does your organization have a customer-centric or internally focused mind set? You better move quickly to an customer centric mind set, because technology and those who have leveraged it are setting the benchmark – it’s not a good idea to not have a delivery date for a customer who’s paying you a million dollars for your product if amazon has been up their nose all of last week informing them about the progress of a $1 order for a rubic’s cube they ordered a few days ago!

A big mind set change is to constantly think about value creation (new stuff). Or value addition (I’m adding new things to the value I have created), or value extension (I’m giving more of the same stuff for the same price). Actually, I believe it’s a chain of mind-sets. Firstly to understand it’s not a market we serve but that there are customers in that market. We can’t possibly target all customers, so we target the ones we value, the ones who will pay us for a value proposition that they like, and that we can provide to them. Value delivery is equally important, because if we promise something and we don’t deliver, that’s bad. Eventually, how do we retain the customer for the value he sees in us and for which he pays us.

The thing is, customers today have so many things competing for their attention, if you’re not able to capture their attention with what you propose, they’re going to forget you. I’m reminded of Seth Godin’s Purple Cow here. He asks, if you’re driving through a field and there are cows grazing on either side, would you stop to have a look? Wow! Look, it’s a cow! It has two ears, and a tail! It even gives milk! Unlikely.

But if one of the cows was purple in color, would you stop? Now that’s interesting. You probably would. The whole idea about value creation is, what’s your purple cow moment? Truth be told, purple cow’s wouldn’t be too interesting after you see the second one. So value propositions aren’t permanent – you have to keep changing them!

Are you creating what they value?

I have a great story to tell on this. I moved from Delhi to Gurgaon about 9 years ago. I lived in an independent house in Delhi, with 3 bedrooms, so I was using 2 split AC units in my hall, and 3 window ACs in my bedrooms. My condominium in Gurgaon does not allow us to use window AC units. And it has 4 bedrooms, so on top of all the wood work and painting I had paid for, I had to buy 4 new split AC units. I went for a cheap option, with the idea that I’d purchase better brands as and when the cheap ones popped off 5-6 years later. Thankfully they didn’t pop in 5-6 years. One did in 8-9 years.  But lo and behold, I found myself buying the same, cheap brand as a replacement. In fact, one of the old split units of a “better” brand popped, and I bought a unit of the cheaper brand to replace it. Cheapo, you might say. But I have my reasons.

In the initial years, the maintenance contract for 4 split units cost me around INR6,000/- per year (around US$90). Now it costs me INR11,000/- per year, about twice as much. But I don’t even want to look at better brands because the cheap one I bought promised and gave me such fabulous value in terms of performance, prompt after sales support, and helpful maintenance people, that I don’t care to find out any longer about the features or customer service improvements of some of the leading brands I used earlier, or new ones that have shown up in the last decade. So there!

That’s value proposition, value delivery and value retention packed into one. For the next 8-9 years, I’m staying with this brand! Just like one of the two cars I ever own will be a Honda!

The question is, is your business focused on creating, adding or extending the value your targeted customers seek? If not, it’s as good a time as any to think about it!

Well, so much for now folks. I hope this one makes sense. More on the subject later!