To exceed customer expectations, understand your customers’ values and focus on customers who share a common vision.
One
of those things that I grapple with the most is trying to define value
add. My banker and accountant always pepper their conversations with
pithy references to my needing to focus more on the value add my
company – and industry – provide. Equally, when with customers, the
latest term they use along the death-march of becoming an “approved”
supplier is to ask what my company’s’ “value proposition,” aka value
add, is. While I have no problem dealing with the question when put on
the spot to respond, I still walk away and grapple with what does value
add really mean.
I think we all are in the same boat
when it comes to adding value. No matter how much we know we add value,
it is difficult to quantify and communicate what value really means.
Worse yet, our customers want value. However, they rarely define what
THEY think value is, and, of course, no one wants to pay extra for
value.
When I think of value, two images come to
mind. The first is to receive something – tangible or not – that really
helps me. In my mind’s eye, this includes sage advice, a helpful hand
when in a problematic situation or something of tremendous lasting
significance. The second image of value I get is about expectations.
Someone can pleasantly surprise me or some company exceeds my
expectations when I purchase a basic item and that brings value. A good
example is the restaurant that costs no more than any other place but
provides over the top service and the best food.
The
tricky part is that in any business, what I think is value may not be
what my customer considers value to be. This reality hit home for me a
couple of years ago when I was visiting a major defense company. I was
scheduled to make a series of presentations to several different
divisions – all with impressive, very military sounding names –
throughout a large corporate campus.
In my first
meeting, I focused on my company being MIL certified. The first
question/comment was that they only wanted to talk about specific
issues related to MIL-31032, to which I responded and made a mental
note to incorporate that into my next presentation. In the second
presentation, I made sure to better cover my company’s MIL
certification status. The first question/comment revolved around
specialty manufacturing processes not related to any specific MIL
qualification.
Again, I made a mental note to
modify my presentation to include these points that appeared to provide
value to this company. My next presentation included all of these
points, which made it longer and more in-depth. About half way through,
one guy stood up and said he could care less about our MIL status or
special processes; that everything they buy is built to commercial
standards, not MIL standards! One company, three divisions, all viewing
value radically differently than the other!
So, every
customer defines value differently. Some want specific tech support
while some measure value as being on-time delivery and quality, and
others just look at price. The challenge for us all is to be able to
comfortably define what our value “sweet spot” is so we can best focus
on those customers who share our vision of value. By comfortable, that
means you have to both believe that you have hit the proverbial
nail-on-the-head and then be able to communicate it so that everyone
understands.
This brings me back to why I grapple so
much about defining value add. What will enable me to charge a premium
for my product? What will convince a company to start buying from my
company? How can I ensure that customers will think of my company first
when they have need for my product? What I do know is that I can’t get
away with offering long lead times, poor on-time delivery, lousy
service and inflated prices; the market will not tolerate that. I also
know that what may work for a competitor – whether across town or
across the globe – will not necessarily work for me.
And
this always brings me back to the same place: the need to spend quality
time with my customers asking them what they are looking for in a
supplier and, not quite so brazenly put, what do they need that they
are not currently getting and would make them willing to pay more to
one supplier over another. The bottom line is if there is anything that
will make a customer willing to pay a premium – as slight as it may be
– or explicitly show loyalty to a supplier – that’s the true definition
of value!
My experience has been that the way
customers define value is often much simpler than most of us would want
to believe – and much easier for each of us to provide than we could
imagine. That extra call to follow-up on a question, the thank-you note
for a big order and making that extra effort when the customer asks for
a favor, all mean a lot more than continually stressing even the most
impressive capability or the latest technical white paper your company
may have. Most important is asking your customers what they value and
then focusing on providing that value add better than anyone else!
As
we head down the final stretch of 2007, everyone should spend a few
minutes trying to define or redefine what value add really means to our
customers and then incorporate that definition into our business plans
for the upcoming new year. PCD&F
Peter Bigelow is president and CEO of IMI (imipcb.com). He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..
