We recently conducted an informal poll of
our contacts on LinkedIn where we asked “In customer value management what is
most important, creating, communicating or capturing value for customers?”
To make things interesting, we also added the option “understanding” so that
the possible answers were
- Creating – You have to create value for your customer first
- Communicating – The customer has to understand what value is being created for them
- Capturing – Otherwise who cares
- Understanding – Is the foundation of Customer Value Management
Of course it is a bit silly to ask people to pick one activity from what
is, or should be, a cycle. And indeed, many of the people who responded pointed
this out (some 20 people declined to vote for this reasons). In the words of
the VP Pricing at a large B2B company “I’m not going to play your game, we both
know that these all depend on each other.”
As of February 10, 2010, forty people took the question in the spirit it was asked, as a way to
provoke a conversation, and there are some interesting results and comments.
It is interesting that Understanding got the most votes. In some sense
this is understandable. If you don’t understand customer value how can you
create or communicate it? At LeveragePoint we began our suite of customer value
management tools with LeveragePoint Value Modeling, which is first of all a
tool for understanding how one creates value. But in fact, our experience
suggests that relatively few companies really understand customer value or
begin by understanding. There are many companies that create value for their
customers and capture it into prices without every understanding what they are
doing or communicating it clearly. In first chapter of their book Value
Merchants, James C. Anderson, Nirmalya Kumar and James A. Narus tell the cautionary tale
of a sales person who got beaten up in a sales negotiation because he did not
understand value but the customer did. This is a telling point, but it is worth
noting that even though the vendor often has only a vague understanding of value, buyers can be much better informed. Of course one would hope that a company understands it own business model and that it will buy the solution that generates the most value.
The phase that got the fewest votes was Capture, which was a bit of a surprise.
As Mark Donatelli, Senior Manager at Acxiom noted, “The fact that capturing has
the lowest response is very telling - it must be the most important! We all
know that measuring results is the only way to know if the value that was created
and communicated actually paid off - capture is king!” In other words, the best
way to show that you have really created something of value is to get someone
to pay for it!
Digging a bit deeper, it is interesting to filter the results by company
scale (See Figure 2). Here we see that enterprises are focused on Communicating
Value while large companies are equally concerned with Communicating and
Capturing and medium-sized companies are the ones focused on Understanding.
This is most likely an artifact of the sample, but it is interesting and may
reflect the investments that enterprises are able to make in marketing and the
more immediate importance of sales to smaller companies. Small companies were
balanced in what they thought most important, perhaps because they are small
and people at small companies have to cover all the bases!
One can also filter results by role (See Figure 3). Here the voting
pattern was predictable:
- Business Development people were concerned with Communicating Customer Value
- Consultants & Engineers focused on Understanding Customer Value
- IT Professionals voted for Creating Customer Value
- Product Managers were most interested in Capturing Customer Value
We plan to do more of these informal polls and if you are interested in Customer Value Management or you would like to continue to discuss the customer value management cycle, please join the LinkedIn Group for Value Management. Suggestions for polls are most welcome.
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Steven Forth
CEO
