Operational excellence is based on value creation. This is often referred to as added value. Meanwhile, in the service sector, the customer experience seems to be the predominant element. In this article, I’m going to clarify these two terms, which complement each other perfectly. I’ll also look at the reasons why you should be interested in these two concepts.
Why focus on the customer?
Let’s start with your customers. They must be at the heart of all corporate strategies. In fact, by buying your products or services, they are the ones who support you. If you ignore your customers, they’ll ignore you too, and you’ll lose market shares. Your customers are your lifeblood, so you have to listen to them. I’m not talking about giving in to every customer request, but we need to understand their needs, so we can respond appropriately.
There’s only one boss: the customer. And he can lay off the entire staff, from director to employee, simply by spending his money elsewhere.
Sam Walton (1918 – 1992), American businessman, founder of Walmart
What is added value?
Added value is always defined from the customer point of view. It’s the customer who decides whether to pay for a certain feature or a certain level of quality. Added value is made of all operations that add value to the initial product.
Added value therefore concerns what is added to the basic functionality and what the customer requires as a minimum.
For example, a pencil must have a body, a lead and ink. If one of these three elements is missing, the product is not viable. Once the functionality has been acquired, it is possible to add value to the product: packaging, durability, accessories, which will justify the price difference.
Identify the value chain
In industrial sectors, the quest for performance means eliminating waste. In particular, I’m talking about anything that doesn’t create value. One of the basic actions, mapping the value chain, is based on this notion of added value. For an introduction to mapping and the value chain, read this article.
It’s important to master the value chain to be successful. Basic functionality must be delivered at the best value for money. Secondly, additional elements must add value in the eyes of the customer.
You need to optimize the performance of your operations or service on its core functionality. You can then add components and functionalities. It is the icing on the cake that will set you apart from your competitors, as long as the cake is edible.
Here’s another example: a cell phone needs to be able to receive and make calls. Once this functionality is up and running, manufacturers can add value to their phone by adding a camera or making it waterproof. Nobody wants a phone with so many options that the battery lasts less than 10 minutes on a call! In this case, the added functionality adds no value to the product.
Customer experience: more than just satisfaction?
Customer experience is the name given to the added value of the service offered to the customer. This is how customers perceive their interaction with the company. This goes far beyond simple product or service functionality. Just like the added value of a product, it’s not the organization that decides what makes a good customer experience – it’s the customer!
Put yourself in the customer’s shoes
You need to offer them a product or service that meets their needs, when they need it and how they want it. We have to make his life easier. You need to make the product or service easy to access, set up, understand and generally use.
You probably have in mind the example of a do-it-yourself product with incomprehensible instructions, or a service that’s unavailable when you need it. What is your experience of this company? Will you be buying other products and services from them? Do you think the designers imagined their product or service from your point of view?
Demanding customers
In 2016, manufactured products can no longer rely solely on their intrinsic value to stand out from the crowd. The customer experience they provide guarantees the brand long-term success. That’s why the term customer experience is so prevalent. There are many ways to work on the customer experience, especially with the net promoter rate.
To determine the value of your products and services, you must always see things from the customer’s point of view.