When your Customers purchase your service or product, they do so for the value it will create or add to their lives.
There is an exchange of value between a customer and a supplier/service provider. Commonly this is thought of in narrow terms: Customers give MONEY, they get a PRODUCT/SERVICE. But that’s only one way to define value.
Price is what you pay, value is what you get.
~ Warren Buffet
The holy grail of product/service development is to align your offerings with a strong Customer Value Proposition. In doing so you can also create value for the enterprise or organisation.
A common mistake businesses make is to define the Value Proposition according to what the organisation hopes/imagines/believes is valuable. Value is in the eye of the beholder, and your offerings to customers are only valuable, if they match to what the customer considers valuable.
Understanding different elements of value and how they shape your customer’s decisions, opens the way for powerful development conversations and more meaningful relationships with customers.
An exchange of value between Customer and Organisation
Organisations exist to create or generate value for the Customer (or Client or Member whom the organisation serves), as well as the Owner of the Organisation. If not recognised and differentiated, talking about value in an organisational/business context gets muddled. While value isn’t the same thing for these two groups – it can be related.
Because value is in the eye of the beholder, it can also differ greatly between Customers. There is a range of things that represent value, and it can change over time. The Value Exchange Ledger Activity helps you define what is the value different customers seek to get in return for the value they give to you.
The value exchange concept provides a powerful language for talking about different kinds of value – known as value elements. With such a vocabulary there can be rich and ongoing conversations exploring what is value in any particular context – because value is dynamic and can shift quickly under different circumstances.
The value exchange I’m talking about here is between Customer and Organisation. (There are other values exchanges like between an Business Owner/Org’n Leader and Organisation; and between an Employee and Employer but they are the subject of other articles.)
Defining a Value Exchange Ledger
The Value Exchange Ledger Activity, is an accounting of what value is put IN and what is sought OUT for the Customer. It involves a ledger, hence the accounting analogy. One side of the Ledger is IN and the other side of the ledger is OUT. Any decisions about what is a ‘balanced’ ledger between IN and OUT for your customer is a judgement entirely belonging to the owner of the ledger.
There is a small risk in using a financial analogy – you might be tempted to think of value exchange as only transactional, when it is more than this. The analogy is simply a pragmatic concrete way to explore something that is conceptual and sometimes highly emotional.
Unlike the Business Owner/Organisation and Employee/Employer Value Exchange Ledgers; the Customer VX Activity is not done directly by customers. It is done as an activity by researchers with a human-centred design sensibility who can empathise with and listen deeply to customers. You should never simply imagine or guess what a Customer is thinking about products and services; you should find out!
What goes in the Ledger
Value elements.
We’ve made life simple for you, by creating a set of Cards with a collection of value elements from a Customer perspective. These don’t cover everything that is possible value – but they’re a good start. We’ve come up with a list of value Elements from the observations and experiences of ourselves and others. There’s blank cards in the set, for you to add your own value elements, in your own words.
Doing the Value Exchange Activity/Creating Customer VX Ledger
The card set comes with an instruction booklet to do the basic Value Exchange Ledger Activity for a single customer.
Given that you are likely wanting the perspective of a group of customers, then more Advanced Instructions are available.
There are many instances in business when an Organisation might do the Value Exchange Ledger activity for Customers. Here’s a couple:
- When analysing data from customer feedback of current product/services looking for opportunities to make improvements
- When doing design and development work on a new product/service that will address a customer value proposition
If you have never done customer design research before, then talk with us about customised Customer Value Research workshops.
What to do with the ledger(s)
The ledger is a tool to organise thoughts about value. It initially reveals things which may be unseen or unspoken. It also becomes a guiding tool for things that you want to make happen.
The populated ledger is a tool for reflection and sensemaking, not judgment. It can help you more deeply empathise with customer perspectives.
The value elements and their interplay help you look for patterns for singular and collective customer perspectives, at an abstract level from granular data. With the level of abstract analysis, you can see things in new ways; and see connections with things that maybe similar at abstract level but very different at granular level.
For example:
“I always look around to get the best deal.”
“I don’t have a lot of discretionary dollars to spend.”
… are both about SAVINGS.
With a set of Customer VX Ledgers, your team can explore about what insights are revealed, and what assumptions are challenged in understanding what is valuable to your customers.
Understanding potential value creation
Naming what is valuable to you and your enterprise is the first step to value creation for Customers.
Next is making plans to create or generate that value; then considering suitable measures for ‘how much’ value will be sufficient to satisfy the Customer’s need or desire.
These steps turns a conversation about value, from something abstract to something tangible. The tangibleness of any value element will be different to each person doing the translating – so be open to diversity of thought but don’t stray from what’s important to your Customers.
In summary, here are the three questions for Value Creation planning:
- What is value?
- How is value created and captured?
- How is value measured?
Conversations about value creation are best had with representatives of the customers for whom you seek to create value. They will keep you honest in honouring what is valuable to them, and can suggest more specific ways to create and measure value.
At Quello we can help you with exploring and making sense of customer value. Talk to us about customised workshops with your team to learn by doing.
This article has been focused on the Customer Value Perspective. There are two other perspectives of significance in enterprise designing and planning. There are separate cards and articles for these perspectives: Business Owner and Employee.
Customer Experience/Service Design
Value exchange thinking can play an important part of CX and Service Design activity. A particular quality of customer experience is only one form of value that a customer might desire. The collection of value elements can broaden and deepen thinking about what makes up a valuable customer experience, as well as a valuable delivery of service.
Future of organisations and customers
Success in organisations/enterprises depends on meeting others ‘needs’ – the needs of your staff, your shareholders as well as your customers. Needs can be synonymous for value. It’s a worthy skill for 21st century enterprises to become highly literate in recognising and speaking about value from multiple perspectives.
It’s time to move away from thinking of your enterprise as gaining predominantly Financial value from your customers, and from offering services/products without a strong sense of how they are valuable to your customers. Business enterprises, in particular, can be an agent for societal change. They are part of an economic architecture and business eco-system that is being disrupted and requires new thinking and directions. The value you gain from customers and you create for customers can result in better futures for our society, our planet and future generations.
Get ready today, to take part in new conversations about value creation.
Author
Helen Palmer, Founder and Director of Quello and other businesses, has applied this thinking about value in directing her businesses. She’s helped others clear thinking obstacles, by using the Value Exchange Ledger Activity to be more playful and less constrained in how they perceive their current and future business products.
(Amended) Photo by Charles Deluvio on Unsplash