The virtuous circle of customer value

The balance between customer value and business value can be hard to maintain. For customers, value from a product or services lies in its ability to solve a problem that is preventing them from making progress or being able to enhance their lives. 

For businesses, value ultimately gets measured in revenue and profits, with the ability to cover their costs as a priority.

Tip the balance too far towards customer value and the business suffers financial and operational stress, whilst tipping the balance too far towards business risks customer-desertion to competitors.

When the balance is right, customers are happy because their needs are being fulfilled, so they’ll keep buying and recommending the product or service. The business is happy too. It is generating revenue, new customers and sufficient profit to satisfy shareholders and reinvest for the future.

This creates sustainability, so that the business can continue to serve its customer well in future, resulting in a virtuous circle of growth.

But again, achieving this balance is not easy.

Uber currently burns through billions of dollars each year subsidising taxi rides for its customers in order to gain market share. This is not a sustainable situation and at some point investors are going to turn the tap off and will be expecting something in return. At the same time, established brands are having their Kodak-moments and going to the wall, because they haven’t been able to adapt fast enough to changing market needs.

Few businesses have the investment resources of Uber to over-compensate on customer value, whilst many are incumbered by legacy processes and operations that make a customer-focus difficult to achieve.

There is no silver-bullet to the problem, but a good starting point for dealing with it is to establish a continuous discovery process that enables the business to keep a finger on the value pulse of its customers and their changing needs. Often organisations lose sight of what their customers need, but by continually examining what they trying to achieve and what is stopping them from reaching their desired outcomes, it is possible to set the scene for better solutions to be found and be turned into viable business models for the future.

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