Do you happen to have a great idea for a product or service? Do you think your idea will disrupt markets and revolutionize the world? Well, here is some bad news: there will be always some one who will not buy from you.
The good thing is – that is totally fine.
However, it doesn’t hurt to know who of all people are suited best for your services. From my opinion, there are two basic vantage points to look at customer value.
The first is value as perceived by the customer and the second is the value that customers generate for a company. Both usually need to be considered over a certain time, however, a company usually evaluates this only when looking at the value extraction from a customer over time and not on the delivery of perceived value for the customer over time.
I do not want to explore the value extraction but rather the value creation in this post.
I believe that starting with a customer-centred approach will eventually create value for any company as well. Apple, Google, Amazon and Facebook follow the same approach more or less – they put the user first not some sales objectives (these come later, of course).
There are, however, different approaches to value from a customer’s perspective that result in four interpretations according to Tony Woodall from the Nottingham Trent University.
Interpretations of customer value
– use value: is subject-based and perceived as the object and subject interact during or after consumption.
– intrinsic value: the counterpart to use value as it is object-based and perceived as the object and subject interact before or during consumption.
– utilitarian value: is also subject-based as it describes the perceived gap between benefits and sacrifices at the moment when intrinsic- and use-value are compared to the efforts (costs, time, activities) that are required to gain a benefit.
– exchange value: is object-based again and is perceived as the countable value that is based on supply and demand as well as the nature of the object and the market in which it is offered.
All these interpretations are perceptions of value and therefore subject to the customer’s evaluation of a product. They are dependent on an individual’s value system. This system seems to be an abstract motivational construct, based on proposed rewards that people are longing for.
Proposed rewards will usually result in actions and behaviours and served as evaluation criteria for customer especially when making consumption choices.But how do you know what to propose? What motivates people to be your customers?
To explore my potential customers, I frequently use the neuro-marketing approach from Hans-Georg Häusel, author of books like “Brain View” and “Think Limbic”. While people were taking purchase decisions, Häusel scanned their brains with a complex machine. His studies resulted in a chart that he calls ‘limbic map’.
This is a helpful construct that provides neuro-scientific insight why people consume and use services seeking for specific rewards like stimulation, dominance, balance, adventure/thrill, discipline/control or fantasy/pleasure, for example.
The limbic map (http://www.nymphenburg.de/limbic-map.html):
It can be very helpful to estimate what motives a product or service can satisfy, as these orientations will influence any cognitive activity and information processing of people and therefore the decision to interact with your company.
As I pointed out in my last post, people do not buy WHAT you do buy WHY and HOW you do it. The ‘limbic map’ corresponded with the WHY and the HOW level of Simon Sinek’s “Golden Circle” (get his book “Start with WHY” to fully understand the concept) and therefore the two complement each other perfectly.
According to Häusel, all people have the same set of basic motives, however, every value system of an individual was unique. Each human will estimate the qualities or attributes of your product differently. The features and functions of your product, or the extrinsic value, will be compared against each intrinsic motive. People only can attain intrinsic value when they are provided satisfaction. Thus, value will always be created at the interface of people and product. They are a symbiotic value system.
However, this is a very subjective idea of value, which is part of a wider construct of customer influences. In addition to the psychological factors (motives, perception, attitudes) there are also personal factors (age, lifestyle, personality), social factors (reference groups, family, role and status) and cultural factors (culture, subculture, social milieu). These customer factors, namely value system, demographics, personal circumstances and experience are best explored through observation or customer data.
With these insights you can create ‘personas’ (http://www.usability.gov/how-to-and-tools/methods/personas.html ) as ideal representations of your customers.
I prefer the creation of personas from the discussion around target groups. Simply because I don’t like to hunt my customers like military objects, but treat them with respect, like a person. Plus, personas are ideal starting points for user journeys. You can use these journeys and break them down into user epics and user stories. And in no time you have a backlog full of items that help you to flesh out and evaluate your new product idea.