“Things may come to those who wait, but only the things left by those who hustle.”
Is your company creating enough value for your customers?
I don’t mean that in a chiding way—just as a thought-provoking question for business strategy.
To address the question, let’s look at it from the customer’s vantage point along two dimensions of what you do for them.
Value derives from the so-what of your solutions: What happens for your customers as a result of what your business does?
That can vary from things that are necessary, but don’t have much effect on the overall results of your customer’s business, to other results that are just huge in their effect. We can graph value on a vertical scale from Low to High Value in terms of financial impact.
We can also use a scale for the scope of the product and service solutions you’re providing (horizontal axis). To the left is an example showing three different scope options that a supplier of components to an original equipment manufacturer (OEM) could choose.
At the left end of the horizontal, it’s work, a task when someone else has already figured out what’s to be done and tells you what to do (though maybe how it’s done is up to you), or you provide a standard product without important services around it. When a component manufacturer builds parts to the print the OEM provided, that’s hardly valueless, but the OEM provided most of the valuable intellectual property. That too often leaves the component maker as a vendor.
Now, the other end of the continuum: When a customer has a problem or aspiration, but how best to address it is not yet defined, all other things being equal you can add a lot more value because you can diagnose, prescribe, and sometimes help them implement. You’re truly a solution-provider, not only a task-completer or a vendor.
In the illustration above, the component maker can increase value by becoming a subject matter expert and design partner, and still more value if the company were to develop and sell proprietary components that improve performance, efficiency, and cost for the OEM.
All else equal, you’re in a better position to make bigger money at the “Help customer succeed” end. (If you currently have a lot of work at the lower left, “Provide me this,” you can improve your mix over time.)
If your revenue comes primarily from providing services to clients, there’s a version of this for you too. To the left is an example for a marketing firm.
Creating bigger value for your clients will often come from solving a thorny, costly problem that your clients have, that they don’t want.
Insight into those problems—and how to get rid of them—yields the “so-what” of your work. How is the customer organization made better off as a result of what your services will do for them? Thinking about and estimating the value that you make possible is SO important for your company.
Adding bigger value can be a powerful source of revenue and margin growth.
If you’re ready to explore ways to provide greater value to your customers, head over here [http://bit.ly/hidden-value-session] to schedule a no-obligation chat with me.
Topics: Customer Satisfaction, Value CreationWed, Jun 29, 2022