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6 STEPS FOR CREATING SUPERIOR CUSTOMER VALUE
In a talk based on his best-selling book,
SECOND TO NONE, Ian outlines six strategies for creating superior customer
value that will help you become number one in your market. "Business
is the activity of creating value," says Ian. "That’s what we
get paid to do. Our customers do not want our products and services, they
want what those products and services will do for them."
Business is the activity of creating value. That is what you get paid to do.
Customers do not want your products and services - they want what
those products and services will do for them. Business people must learn
to become value creators because those who understand value best
will prosper and those who do not will fail.
of the industry. Very relevant and a lot of take home value.”
Greenworld Garden Centre Group
1. Focus on value
Features are what we build in to our products and services but value
is what our customers get out of them. Value can be explained
by the formula Value =
Benefits - Costs. As long as customers believe the benefits they receive
outweigh the costs they have paid they will consider they have
received value, and they
will be satisfied. They are therefore likely to come back with repeat
business and they may even tell others about their good experience.
Everyone in your business
needs to use this formula to guide their actions because at the end of
every encounter with your business your customers ask themselves "What benefits
have I received and what costs did I have to pay to get those benefits." Creating
superior customer value must be the primary focus of everyone working
in your business.
2. Compete on value not price
In a crowded and competitive market place it is tempting to
compete on the basis of price. Obviously this is dangerous
because unless you accompany your discounts
with cost savings, you are giving away your profits. But not only can
discounting destroy your own business, it could destroy the
profitability of your entire
industry. Fortunately, price is not the only thing that matters otherwise
we would all be driving Ladas! The trouble is, if you don’t
have a value-based competitive strategy, you have no option
but to compete on price alone. There are many value
based competitive strategies you could use. Some choose to offer low benefits
at low cost, while others offer high benefits but at high costs. Unfortunately
most of us use a very ineffective strategy. We offer the same benefits
at the same costs as our competitors and then wonder why no
one sees us as being unique.
In this crowded and competitive market you are likely to find that delivering
more benefits at a lower cost (but not at a lower price) will be the most
successful strategy to follow.
were inspired by your presentation and thought provoking
Alan Riley, Westpac Trust
3. Look through your customers’ eyes.
Most people today would agree that customer service is the key to commercial
success. This is wrong! Nearly 80 years ago Conrad Hilton pointed out that customer
service is the only difference between one hotel and another. Since then we have
written thousands of books on customer service, set up customer service departments
and written vision and mission statements proclaiming our commitment to our customers.
Yet most of us would say that we have had a poor experience as a customer within
the last two weeks! How can that be?
Customer service is a trap. Service is what you do for someone else and therefore
if you aim to deliver excellent customer service you will think about what you
are going to do. But what you do for your customers is not important. What they need you
to do is the important thing. By focusing on what you will do you look at the
world from inside your business out. Your customers, on the other hand, look
at your business from the outside in. Sometimes the disconnect is so great your
customers cannot even talk to you.
Since value exists in the mind of the customer, businesses must learn to see
the world through the eyes of their customers. Most of us do not. Our vision
is limited, even distorted. Policies, procedures, traditions and businesses practices
give us a narrow view of the world and prevent us from providing what their customers
are looking for.
Successful business leaders make their customers the centre of their universe.
They find ways of seeing the world through the eyes of the customer. They bring
the world of the customer into the workplace. They make sure everyone knows,
and never forgets, how their customers see the world.
4. Make your customers successful.
Customer satisfaction is a much better
target to aim for than customer service. Satisfaction is
the emotional state
we get when our needs are met. If you aim to satisfy your
customers you will start by finding out what they needs and
you will measure
your success not by what you have done but by how your customers
feel after you have done it. Many business leaders have discovered
that customer satisfaction translates onto the bottom line.
Some companies have discovered that simply by increasing
by one percentage point, they can increase their revenue
by tens of millions of dollars.
|“It was inspiring
and educational. Many members commented on the motivational
aspect of your presentation.”
Tim Roper, CEO, Unichem
Unfortunately, in this tough market place, even satisfying
your customers is not enough. You know that your future financial
success will come
not from attracting new customers, but from getting existing
customers to return more often to buy more. Customer satisfaction
is not enough
to get customers to come back. Studies show that anywhere from
68% to 85% of the customers who switch from one supplier to
happy or very happy at the time they switched! That is very
scary. Today’s happy customers could become tomorrow’s ex-customers.
The reason is that when people get what they expect, they
do not notice
it. And, people who do not notice you will not stay loyal.
The aim must be not to service or satisfy your customers, but
to make them successful. That means you must get inside your
customer’s world and find out what it is
they are trying to achieve and then commit yourself to helping do that.
If your customers are in business themselves, you must understand
their business as well
as your own. It is not enough to talk to your customers, you must talk
to their customers to find out what their customers want from
them. Then you can help
them deliver to their customers. But even customers who are not in business
themselves have customers. All of us spend most of our time
trying to please others. Find
out what your customers are trying to do, help them to do that and they
will not think of themselves as being your customers. They
will believe that your
are their partners. If they believe that you are an important part of their
own success, they will want to maintain a relationship with
presentation was excellent and well received. You are
a real pro.”
Gene Imke, Oklahoma City
5. Reduce the costs.
You need to be a low cost supplier but
this does not mean reducing the price. Three other costs that
customers pay, which they consider
the be even less affordable than the purchase price - are time,
effort and anxiety. If you can reduce these costs customers
will not be
so price sensitive. In fact, they might even be prepared to
pay more. The key to reducing these costs lies in understanding
your business processes. Never forget that our society is one
that competes on speed, convenience and reliability. We must
be able to
respond quickly to our customer’s’ requests, we must be easy
to deal with and we must do what we say we are going to do.
6. Give them something extra.
Businesses must also increase the benefits
they provide to their customers. There are three levels at
are created but two of these, the basic product and service
and support services, are today just hygiene factors. You
must get them right
to be in business but you will not get a competitive advantage
by doing so. You can delight your customers by giving them
extra and, thereby, gain an advantage over you competitors.
These delighters are simply solutions to problems your customers
love you to solve but cannot reasonably expect that you would.
And when you do, you knock their socks off. Also, if you can
customers improve their business performance by reduce the
costs their customers have to pay, then you will have created
for your customers.
For a copy
of the best-selling books
Second To None" or
the "Pocket Second To None" Click HERE.