The Customer Value Equation
My approach to the Customer is fundamentally one of creating superior value for the Customer. In an earlier post I spelled out my formula for creating superior value:
Value = Benefit – Effort – Risk – Price +/- Treatment
If you want to create more value for the Customer then you can focus on any of these five levers. In this post I want to focus upon the last one “Treatment”. Fundamentally “Treatment” is how you leave your Customer feeling.
The Values Proposition:Do Small Things With Love
In Why Is It So Hard to Be Kind? William C Taylor shares the story about how his father was treated as an economic object (“I-It” in Buber’s terms) by his Cadillac dealer even though he had been a loyal Cadillac customer. Then William contrasts this to the way that he was treated (“I-Thou”) by a Buick Dealer. To cut a long story short the Buick dealer: honoured an expired loyalty certificate that the Cadillac dealer would not honour; allowed William’s father to take the car for the weekend – without being asked; and then built an amazing bond with William’s father. How? In William’s words:
“Monday rolled around and my father found himself being rushed not to the dealer but to the hospital, with what turned out to be a medical problem that required surgery (He’s doing great now, thanks.) As he was lying in his hospital bed, thinking about whatever it is we think about in these moments, he realized that the Buick Lacrosse was sitting in his garage! So he called the dealer from the hospital and asked how he could get the car back. “Don’t worry about the car,” he said. “Just get better.” And the next morning, what should arrive at the hospital but a lovely bouquet of flowers and a nice note from the Buick dealer!“
Recommended for YouWebcast: Build a Powerful Network and Accelerate your Growth
In a follow up post William shares his visit to a retinal specialist and this is what he says about his experience:
“This doctor did an utterly competent exam, explained my situation, and offered a sound course of action. So I’m fine. Yet I keep thinking back to the experience, not because of the quality of the medical care I received, which was superb, but because of how uncaring the experience felt. As I sat in the waiting room, it seemed more like the offices of a payday lender or a bail bondsman than that of a highly credentialed surgeon. “If you arrive late, your appointment may be rescheduled,” one sign warned. “Copay is due upon arrival,” another signed explained. My fellow patients and I were nervous, anxious, worried about our eyesight. Yet it felt like the doctor thought of us as a collection of truants, tightwads, and general layabouts.”
William goes on to write:
“There is a temptation, amidst the turmoil, for pundits to conclude that the only sensible response is to make bold bets — new business models that challenge the logic of an industry, products that aim to be “category killers” and obsolete the competition. But I’ve come to believe that a better way to respond to uncertainty is with small gestures that send big signals about what you care about and stand for. In a world defined by crisis, acts of generosity and reassurance take on outsized importance.”
“Nobody is opposed to a good bottom-line deal,” I concluded at the time. “But what we remember and what we prize are small gestures of connection and compassion that introduce a touch of humanity into the dollars-and-cents world in which we spend most of our time.“
“As the value proposition gets rewritten in industry after industry, it’s organizations with an authentic VALUES PROPOSITION that rise above the chaos and connect with customers. Few of us will ever do “great things” that remake companies and reshape industries. But all of us can do small things with great feeling and an authentic sense of emotion.”
James G. Barnes said something very similar when he published his book Secrets of Customer Relationship Management. What was the subtitle? “Its All About How You Make Them Feel“
What does Frederick Richheld have to say?
In Profiting From the Golden Rule Frederick Richheld stresses the importance of the “I-Thou” orientation. In his words:
“Our system of financial accounting rewards quarterly profits, but struggles mightily to place a value on ethical behavior“
“Reputation is earned through the simple, age-old concept of the Golden Rule: treat others as you yourself would want to be treated. Each time you live up to the Golden Rule, your reputation is enhanced; each time you fail, it is diminished. And the mathematics of long-term financial success — revenues, profits, cash flow — square perfectly with this scorecard.”
“We all want to be treated with honor and respect in ways, large and small, that enrich our lives. Such experiences not only make us happy, we want to share them with people we care about. By recommending an experience, we’re signaling our trust that our friends will be treated similarly. Recommendations also signal to businesses how customers view their relationship with the company. When customers feel so well treated that they enthusiastically recommend a company to friends, they are promoters. When treated so badly they recommend avoiding the company, they are detractors. Both have direct and measurable economic consequences.”
What is in unlimited demand yet is in limited supply in the modern world?
“We strive to deliver something for which there is unlimited demand–being treated with honor and respect. There seems to be a very limited supply of that in today’s world.” CEO Dan Cathy, Chick-fil-A (an award winning US company).