More than ever, businesses are obsessed with giving their customers “better value”. The Recession contributed to this fixation. Less money to spend, more uncertainty about the future, so let’s make sure we get our money’s worth from every purchase. But the concept of “value” can be a slippery goal to actually understand and accomplish.
At the same time, another trend introduces a potential challenge for providing better value for customers – the explosion of data from the internet, or “Big Data.” It may seem like a contradiction in that by knowing more about our customers’ habits and behavior (for both B2C and B2B), we should be able to deliver better value. The problem is that so much of the data is identified, gathered, and evaluated by IT people, or “techies,” who dwell on so much information that it becomes difficult for them to diagnose and determine what is truly relevant, compelling and even “buzzworthy” for customers, especially Millennials who rely almost exclusively on internet feedback for purchase decisions. Peter Drucker put it in the right perspective when he said the “purpose of a business is not to make money, but to find a customer and satisfy that customer.”
Instead of focusing on the data, businesses must start with their customers. Tim Powell, the founder of The Knowledge Agency, has developed an innovative model for decision making called the “Knowledge Value Chain“. Tim uses a triangle with several layers to illustrate this decision making process, with “Data” at the bottom, and “Customer Value” at the top. To maximize value, this model encourages business people to start at the top level to fully understand what really drives the customer’s behavior, and work down the pyramid to determine what data is needed and how it should be analyzed.
Recognition of the need to bridge this gap between big data and optimal value is evidenced by a new Master’s program at Columbia University, “Information and Knowledge Strategy,” where Tim teaches part time. Attendance at this program is exploding, with many of the students are seasoned IT managers.
A related challenge is how to dig deeper to more thoroughly identify new customer insights and (more importantly) key emotions that will influence behavior. New innovative research techniques have been developed recently to better diagnose these critical customer drivers, especially in the B2B world. Hope Picker is a research expert on these break-through methods. (You can find her at Outlook.com)
Another challenge is to gain a consensus on how to define “value”. Most consumer product companies define value as the “benefit/price.” This is a very simple, yet useful guideline for most business people, even in B2B. Branding is all about creating relationships with customers that can promise a meaningful, distinctive benefit. The more compelling and successful the benefit, the greater the value will be to customers (and usually bigger profits, as they can charge a higher price). However, defining “benefit” in a quantitative way for more effectively measuring performance can be difficult (Powell’s KVC model addresses metrics that can better define value).
Smart use of “Big Data” can help us learn more about customer attitudes and habits, but to create a benefit and/or new offers that will truly astonish and embrace customers, one has to drill down to find those emotional drivers that will make a company/product/service brand really stand. Communications in general are focusing more on the emotional appeal, as discussed in my earlier blog and P&G’s noteworthy commercial during the Sochi Olympics.
For more on emotional branding, including insights on brand trust and other branding trends, go to YouTube for an interview of me by Tim Powell.
