It doesn’t take a genius to see how customer value contributes to business success. However, a genius did weigh in on the topic. Albert Einstein suggested we should “Try not to become a man of success, but rather try to become a man of value.”
At its core, value creation is central to all phases of our customer relationship. To be effective in business, we must:
- Explore value: Understand the wants and needs of our prospective customers.
- Create value: Craft solutions to address our prospective and existing customers’ needs.
- Market value: Communicate the benefits of our solutions to existing and prospective customers.
- Sell value: Help customers find sufficient value in our offerings so they will provide something of value in return (e.g., make a purchase).
- Deliver value: Ensure our customers receive the value they were promised through our products and services.
- Prosper through value efficiency: Deliver value economically so we can sustain and grow.
In short, customers perceive value when we offer new products that solve their ongoing problems, anticipate unstated needs, reduce effort, and enhance convenience. They also experience value when we effectively support our solutions.
How Do You Know If We Are Producing Value?
Given the importance of customer value, we should assess value perception by using multi-modal approaches that include:
- Customer stories, received from team members and informal discussions with customers
- Subjective customer input, captured in online and offline customer communications and through activities like focus groups
- Key performance indicators, reflected in calculations of customer engagement such as cross-sell, customer lifetime value, customer retention, and customer complaints
Objective customer input, acquired through survey questions related to perceptions of satisfaction, repurchase intent, and likelihood to recommend.
Net Promoter Score as a Measure of Relationship Value
Let’s examine how “objective customer input” helps us focus on behaviors that affect value perception and loyalty.
Specifically, let’s look at the Net Promoter Score (NPS).
As you likely know, NPS is calculated by asking:
On a scale of 0-10, how likely are you to recommend our company to a friend or colleague?
Based on responses, customers are categorized as either:
Detractors (if they select between 0-6)
Passives (if they choose 7 or 8), and
Promoters (if they indicate 9 or 10)
NPS is calculated by subtracting detractors from promoters and dividing that sum by the total number of people who respond to the survey. The 0s through 10s given by customers aren’t the score—those numbers categorize people, and that categorization creates the score.
The Benefits of Focusing on Behaviors That Drive Value and Create Promoters
While some managers focus on the “score” derived from the NPS, Harry Hynekamp, vice president of fan experience for AMB Sports & Entertainment, suggests:
“We are obsessed with understanding how to behave so customers say they received more value than they expected. That is the path for creating NPS promoters. In turn, those promoters spend more, churn less, and encourage their friends and family to choose us.”
In keeping with Harry’s observation, promoters are:
- Likely to recommend 3.5 people to your business.
- Five times more likely to buy more goods or services.
- Seven times more likely to forgive brands for errors.
- Nine times more likely to try new product offers from businesses they love.
Value creation through products and services matters!
Metrics like the Net Promoter Score offer insights into perceived customer value and what we can do to exceed customer expectations in ways that garner loyalty and referrals.
What behaviors are you prioritizing to drive value and create promoters in your organization?
Joseph Michelli, Ph.D., is a certified customer experience professional, business consultant, and author of 10 books spotlighting brands like Starbucks, Mercedes-Benz, and Zappos. You can connect with Joseph on LinkedIn.