The Quality Revolution was meant to be customer focused, instead became process centric and one of record keeping. Nonetheless, Total Customer Value Management can learn from the Quality movement. There is much to learn.
Can Customer Value Change Customer Behaviour and Vice Versa?
The answer to both questions is yes. But as I go through articles on changing behaviour I see very little or no mention of Creating Value for the consumer and society. Why is this? There is no question that Customer Value Creation is a major driver of behavioural change. I think the reason is that Customer Value is not commonly understood or used by many people. Take Keith Weeds article on Change Consumer Behaviour with these 5 Levers, in HBR, November 2012. He talks about making it understood, easy, desirable, make it rewarding and make it a habit.
I am also enclosing Dr. Moshe Davidows comments. He is from the Technion, Israel and Editor of the Journal of Creating Value.
You can argue that Customer Value is at the back of these ideas.
Consumer behaviour, according to Wiki, is the study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society.
I guess Customer Value lurks somewhere in this statement. Moshe Davidow, Editor of the Journal of Creating Value said the same: it is understood. If it is understood, then why not say it?
Changing consumer behaviour is about adding more value to the Customers. Whether it is Starbucks or cell phones. Very often the value is not easily seen by the Customers as they cannot anticipate the new product, and how to use it. They fear the change and having to get out of their comfort zone. Witness the first telephone consumer research showed it was a loser. Or the cell phone. Who wanted to be connected or reachable all of the time. Who wanted the intrusion? Or having to pay so much for a cup of coffee?
The Customer value was not apparent, but was there, even though time and money had to be spent in making these concepts understandable, easy and desirable, and rewarding before they became a habit or a way of life. Customers resist change, they are afraid of loss rather than of gain, and hence their first reaction is not to change. I am one of the late changers to cell phones. Apart from aversion to change, and loss mitigation it is also emotions, peer pressure and a host of other issues that trigger change.
Who would have thought we would use our phones and the net for Uber, for making payments, or that air transport would become a way of life, or that driverless cars are on the horizon or free energy is a real possibility. They will catch on only if they provide Customer Value, and if the companies can extract value in the future from these ideas.
If we accept that greater value can influence Customer behaviour, then we have to ask how changing consumer behaviour impacts the Customers value expectation. Will he expect different value parameters? Will his conventional view of value (s)he expects give way to an entirely different set of value expectations?
The answer is yes. No longer will (s)he consider product value from a conventional TV when the flat TV is available. No longer will all face to face meetings have a necessarily higher value than a Skype meeting.
What we should conclude is that big and massive changes (and also small ones) start with a heightened Customer Value potential. Consumer behaviour people use their expertise to influence behaviour towards the greater value product and service. This in turn changes our Value expectations.
Moshe Davidows comments:
- Wiki says that Value is a measure of the benefit provided by a good or service to an economic agent. In other words, benefits add value.
- According to Weed's article, easy desirable and rewarding are all clear benefits, while understood and habit are also benefits, although less clear. The value is implicit in what he is saying.
- His article is talking about sustainable marketing, and he says brands cannot do it alone. Tobias Webb talks about collaboration between brands and other agents. Now we are talking about adding value to other suppliers as well as to society and to consumers.
- Why don't we call it Value, since at the bottom line we are definitely talking about value? I believe that the word "value" was co-opted by economics, where it does not mean what we think it means. Economic value, market value, fair value. All economic terms that means different things. By the time marketing developed, they were so intent on distancing marketing from economics, that they changed the terminology.
- We need to take the term back! Not benefits, but value! Wiki says a benefit is something good that comes from something else.
- You talk about the fear of change. Kahneman and Tversky talk about "Risk Aversion" or "Loss Aversion", consumers strongly prefer avoiding losses rather than acquiring gains. They also talk about the "Endowment Effect" where a good that a person owns is worth more than an identical good that they do not own. This has major implications for marketing, consumer behaviour and change.
- The key to change is small increments. Let consumers get used to something and see its real value. They will then want to use it. This is why marketers hand out freebies, offer trial periods, test drives, etc.
- Economic Value erodes over time due to changing expectations. Emotional value may remain constant. As consumer expectations increase (a given), the value of a particular product goes down. This might be similar to the discounted value of money over time, but for a different reason. At one point a car without a radio or air conditioner would have been great for me, now however, it does not have much value, as my expectations are much higher. You allude to this when you talk about the TV screen. A lot of people no longer have a house phone (great value 15-20 years ago). We no longer call places, today we call people. Cell phones have eroded the value of a house phone. Is this a form of value destruction? I think so.
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
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.
I notice more and more that the Customer is taken for granted or allotted a by the way mention in new business strategies. Forbes and many others have written about this and bemoaned the fact, and warned companies not to ignore the customer.
Here is an excellent review on Gautam Mahajan's book on Value Creation written by Colin Shaw, founder and CEO of Beyond Philosophy. Colin is an international author of five bestselling books and an engaging keynote speaker..
In my book, Value Creation: The Definitive Guide for Business Leaders, I added a 4th A (Ability) to what Management gurus talk about in the 3 Aís to ready ourselves for the future
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.