Building a CEx that Creates Value for Customers… And for Companies

Guest post by Dr. Graham Hill, Partner, Optima Partners and Associate, DesignThinkers

Too many customer experiences are created just for the benefit of companies. Customer are either a target or an afterthought. Many customer experience practitioners don’t see the 900lb Gorilla in the room; the most important touch-points are not about marketing, sales or service, but about the weeks, months, even years of product usage. Companies need to re-orient the customer experience around what customers’ value, the touch-points they use to create it and how the company can benefit from co-creating more value together with customers. Doing this opens up new opportunities to earn revenues long after the point of sale.

Inside-out versions of CEx

We tend to see the world in terms of who we are and what we do. It’s a cognitive bias colloquially known as Maslow’s Hammer. So advertising people, who obsess about Brands, talk about the customer experience (CEx) in terms of creating a branded experience. And internet people, who obsess about ecommerce, talk about the CEx in terms of creating a better on-line experience. And CRM people, who obsess about marketing, sales and service, talk about CEx in terms of, yes, you’ve guessed it, more efficient and effective, sales and service.

These are all inside-out versions of CEx. They are only about companies, their consultants and the vendors who service them both. They are NOT about customers. They all pay lip-service to customers, but the customer is not at the heart of their thinking, let alone their doing. They are at best a target, at worst, just an afterthought. It is a lot like waiting on-hold in a customer service queue and hearing a sugary voice intone on the telephone, “your business is important to us”. Sure it is, but not enough to staff the call centre with sufficient people to answer my call in a reasonable time.

Enabling Customers

Make no mistake, the CEx IS about brands, and the online experience, and marketing, sales and service, but it is about so much more as well. As was recently suggested in an online discussion, “CEx… is the sum total of the interactions a customer has with your company“. That’s close, but not quite close enough. In fact, most of the inside-out versions of CEx are so busy focusing on themselves that they don’t see the 900lb Gorilla in the room. That for the vast majority of customers, the most frequent and most important touchpoints are with the product during the days, weeks, months, even years of usage. For customers, the CEx is mostly about value-in-use.

If customers care the most about value-in-use, then the CEx should mostly be about enabling customers to get the most out of using the company’s products during usage touchpoints. That starts with helping the customer establish a need for the product, helping them to make the right choices and offering them the right sales terms. All the touchpoints the inside-out CEx-ers talk about. The ones of most value to the company. But critically, the CEX is also about supporting them when they first use the product, and then over a lifetime of product usage, up to the point where it is disposed of. These are the touchpoints the inside-out CEx-ers don’t like to talk about. The ones of most value to the customer.

The company’s benefit(s)

This doesn’t mean bending over backwards just to give customers everything for free. Companies don’t need to become charities. It does mean understanding what customers are trying to do at each touch-point in the CEx and at what creates value for them during each touch-point, and then working out how to enable customers to create more value in such a way that the company can create more value too. And value isn’t just hard cash. It can also be knowledge that is used to drive innovation, relationships that reduce the cost of the next sale, even advocacy that drives word of mouth recommendation. The CEx isn’t just about creating value for customers, it’s about value co-creation together with customers.

If companies do this intelligently, it can turn upside-down how they go to market. Rather than just charging customers for outputs at the point of sale then abandoning them to their fate, which is so often what happens, companies can also charge customers for ongoing outcomes during the weeks, months and years of using the product. For example, Rolls Royce Aviation doesn’t sell aero engines any more. Instead, it sells ‘power by the hour’. Customers only pay Rolls Royce when the aero engine is used to fly their airplanes. And the airline may even be paid by Rolls Royce for maintaining the same engines in their own facilities. Its all part of a move towards outcome-based contracting that is sweeping business.

The bottom line

If we want CEx to become more than just another advertising slogan, ‘one touch’ button or marketing cross-sell campaign, we need to start to think about it from the customer’s perspective. And to work out how to co-create more value together with customers. Not convinced? Ask yourself a simple question, “which company would you prefer to do business with? One that is only interested in creating value for itself, or one that wants to co-create value together with YOU!”. It’s a no-brainer isn’t it? It should be for companies too.

Graham Hill
Customer-centric Innovator
@grahamhill

Further Reading:

Merz, He & Vargo
The Evolving Brand Logic: A Service-dominant Logic Perspective
http://www.sdlogic.net/Merz_Yi_Vargo_2009.pdf

Knowledge@Wharton
‘Power by the Hour’: Can Paying Only for Performance Redefine How Products Are Sold and Serviced?
http://knowledge.wharton.upenn.edu/article.cfm?articleid=1665

Irene Ng
Outcome-Based Contracting: Changing the Boundaries of B2B Customer Relationships
http://www.aimresearch.org/uploads/File/Publications/Executive%20Briefings%202/Outcome_based_contracting.pdf

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15 responses to “Building a CEx that Creates Value for Customers… And for Companies

  1. I like your input this is a direct result of the full acceptance of internet. It is inevitable for companies to act this way otherwise there will be no new prosperity and companies will evantually fade away. The impact of what you suggest is comparable with Ford’s assembly line making products affordable for middle class. Frankly it is my experience that the nowadays organizations are based on what Ford and others started a century ago. Focus on shareholder value, minimizing cost, keeping customer out of the process, non-disclosure of knowledge, limited employers empowerment (silo’s) co-creation or working together only if it’s to do it yourself at the end. This organization behavior makes acting as you describe almost impossible. Are there any examples of doing this without a drastic organization change?

    • Hi Roel,

      From my pov many organizations are already doing this. Maybe not in whole, but they’ve started the journey. And more so, they have started the journey not because of a top-briefing, but because people doing the jobs of helping and supporting Customers every day, feel that they need to do it another way.

      We really shouldn’t wait for organizational change to be happened upon us.. we should drive it with each decision we personally make, with each project we do and with each action we take. The above, imo, is not some kind of corporate strategy or road-map, it is a mindset and approach which one can start applying every day in every corner of the company.. including yours..

      Try it.. it works!

      Wim

  2. Graham and Wim,

    thanks for this article that helped me understand a little more. I can relate well to CEx and also the concept of value-in-use in the terms of investment goods. When it comes to real commodities like food, I’d be interested in how you define or establish a value-in-use of, e.g, a can of creamed corn. This is something that I use as part of a dish, say a shepherds pie. I may see it slightly simplistic but in this case value-in-use appears to be trading value? Can you shed some light, please?

    • Hello Thomas,

      Thx for your stopping by and taking the time to comment!

      If you tell me how you use creamed corn, what you use it for and what (outcome) you are trying to achieve using it.. you probably told us the value in use of creamed corn.. (to you)..

      If you tell us how you try to find it in the store, how you make your selection from the dozen of options you have to choose from, how you store it at home and what triggers you to actually using it and then answer my first question.. you are taking your understanding to the “end-to-end” level.. where most companies (if ever) only focus on the part until you’ve bought the product..

      Trying to understand the end-to-end Customer experience, from initial trigger/consideration all the way to using it (and disposing of it) is really as valuable for high value investment goods as it is for low value commodities.. Even more so, when you are trying to get your product out of the commodity zone I think..

      Of course this will only pay if you use the insight to improve the Customer’s experience, not only your end of the deal..

      Makes sense?

      Wim

      • Hi Wim,

        thanks for answering (and for notifying me via Twitter). Maybe I interpret a little too much into value-in-use but let’s try going the approach you suggested by answering the questions.

        I admit that the whole example is probably a very crude/extreme one.

        As a precursor: I subscribe to the point you make about getting a product out of the commodity zone. To achieve this it is necessary to add value (for or with the customer). The caveat is, of course, that the customer must be willing to receive added value at all.

        Back to the example: I use creamed corn for exactly one purpose: as an ingredient to a Shepherds Pie (there may be more recipies, but this is the one for me). The first outcome is adding some taste to the dish and the ultimate outcome is nutrition.

        Now, when I go buying it it of course is part of a larger transaction (say the weekly grocery spree). Finding it is simple enough as it is amongst the canned food items. The decision criteria is solely the price. For the sake of the example I tried some brands and there is no difference in nutritional value or taste. Sticking to the example I use an “Aldi” type of store for the purchase. Storage at home is easy enough with canned items. The purchase, of course happens, because I want to have a Shepherds Pie. Disposal is equally simple, as there is a recycling for the cans.

        Now: Why do I choose canned stuff instead of preparing it fresh? Time; preparing it myself lasts too long (and it is probably also cheaper that way, due to economies of scale that the producer has working in their favor).

        In this example the support for the first use comes from somewhere else (the cook book). There is also no further lifetime support (other than delivering it in a can, which is industry standard).

        As a conclusion I would say that the value-in-use in an example like this (and fuel for the family car – as opposed to my boat – could be another one) is approximately covered by the cost of transaction, as I do not choose it for the good recipes that might be printed on another brand’s can or the additional service that is provided for other retail goods (e.g. boutique for clothing, or the pre/post purchase consulting I might get in an electronics store).

        Is this a fair statement? If so, the follow-up conclusion is that for a number of products value-in-use considerations might not be necessary.

        Thomas

  3. Hello Graham and Wim
    You and I are in agreement as regards the usage process and how the vast majority of CX efforts neglect this. I find it noteworthy that the usage process is the means by which the customer creates/harvest the value of any product-service-solution that is offered by the company. And yet this the process that it not really thought about and addressed by many companies.

    This is what I wrote: “It is worth noting that real value, from the customer’s perspective, is only created in the usage process. Too many suppliers neglect to pay sufficient attention to the customer’s actual usage process. So they fail to come up with solutions that minimise the effort of using these product or service. This is an area in which Apple has excelled and made its fortune. Now compare Apples attention to detail (as regards the user experience) to this: How “wrap rage is hurting the customer experience”

    You can read the full post here if interested: http://thecustomerblog.co.uk/2011/05/03/thinking-strategically-about-customer-experience-the-5-components-of-customer-value/

    Maz

    • Hi Maz,

      Some valuable thoughts in your post.. The one comment I have, is that I’ll never try defining value, because value can only be defined by it’s beneficiary..

      I think the vast majority of CX efforts not only ignores this, they work their way through the design process based on numerous assumptions about the value they are adding for the Customer (“how about we build an additional USB-port in the mobile device? If one is of value, three must be of tripple value, no?”), instead of finding solutions together with Customers for the problems they encounter in the end to end process, including using/consuming.

      Thx for stopping by and sharing your thoughts and blog.

      Wim

  4. I am only “starting on this journey” from an intellectual point of view, but I’ve taken a few things away with me on this theme this from Wim, Graham Hill, and others like Mark Tamis this year. VoiceSage is entirely focused on “moving the business metric” for the enterprise client and in this we have been focused on aligning interests and efforts towards an agreed outcome (the metric). Focusing on “the jobs to be done” or “the jobs your software has been hired by the client to do” is a core focus of where I spend my time (as well as speculating as to what future jobs to be done might be). In day to day efforts this shows up as removing friction in use or deployment, or finding new use case contexts. Although I am many years at “this sort of thing’ I still find it hard to be truly “outside in”, but I am trying, I am trying. So how do you learn it? you learn it by doing it. So off I go again…..:)

    • Hi Paul,

      That’s it.. just start trying it. I do that too, and see opportunity for improvement every day (other words for: “and I fail too” ;)

      I also agree the writing and research can be intellectually interesting. For sure this is one way for me to start understanding and framing a new concept. I then try to connect the ideas and frameworks with my own, every day, practice as a consultant and the jobs my Customers ask me to do..

      And what I have always experienced before (it’s never about the job they ask me to do, it is about the outcome they want to achieve and ways to achieve them better/faster/easier/cheaper) has been put in context for me over the past 2 to 3 years, reading, doing, learning..

      One (important) addition: I do tell my Customers these days, that they should focus more on their Customer’s desired outcomes, not just their own..

      Thx for taking time to join the discussion here :)

      Wim

  5. Like Paul I’ve been a spunge for the insights I’ve gained in the past two years from Wim, Graham, and the others in my value networks in relation to Service Dominant Logic, Value Co Creation, Value In Use, SCRM (what that means through the topics mentioned above) I have the proof too, lots and lots of information pdf’s, articles, blog posts just like this one :-)

    And even though I’ll sound like a broken record I’ll have to repeat it again, None of these things will matter to those who read it unless they’ve come to terms with SDL, VCC, VIU, ODI because it’s impossible to gain momentum unless you’ve considered what this post is talking about unless you have a firm foundation of what leads to things mentioned in this post, otherwise it’s just “words”

    It’s far from an easy task, you can admit that you have a drug problem but the first notion is to accept it, then the real work begins. Many don’t accept it as a way of “business practice” many don’t see the things going on everyday to make the right assessments to capitalize on it, and many don’t take the time to see just how valuable this is…

    But instead of ranting about it, i’d rather give you an example. Yesterday I was reviewing the Dell Streak smartphone, online reviews, Dell’s website, Youtube, etc etc… I got alot of information, much of it came from other users, (in fact all of it) and today I decided to actual go to the retailer who is carrying the product (Rogers Wireless) I visited one of the retail locations and they asked me how can they help me, i said…. I would like to test drive the Dell Streak, the rep brings me to where it was and what awaited me was a plastic prototype, not a working model…

    I said what is this, she says it’s the Dell Streak, I said, no this is a plastic paper weight, what do you want me to do with this, without boring you and extending the story, I left the store with no smartphone and no actual working prototype to make a purchase decision….

    This is a prime example that there isn’t someone at that retail store, nor the company itself, and even right down to Dell who understands what Graham has been saying, not one person, because if they did, I would have had not only a working model but i would have probably had made the purchase…. what happens after that…? well that’s another topic in itself…

    Cheers
    Spiro

    • Hi Spiro,

      Great example! The people who designed this as an answer to the ‘Customer’s decision journey’ – to be able to get multiple jobs done – through this one device, have not even considered the Customer’s pov..

      Probably not much different with the smartphone itself. It will likely be pre-loaded with multiple useless apps and new “functionalities” you will never use.. but hey, you must consider the enormous value for (your) money you received ;)

      Thx again for your loyal visits and valuable comments here! Very much appreciated.

      Wim

      • One of the things also I’ve realized through this learning experience is how much of my “sight” has opened up, insight, foresight, and broadened my scope of “seeing these things” that others may not.

        Here’s a perfect example as it continues on with my experience of the Dell Streak, as I mentioned in my prior comment and in relation to what you said in your replies to the other people commenting how important it is to see the “value in use”

        Even though yesterday as i was researching the Dell I came across a few things that “didn’t please me” for example… if you have a look at the video below….

        2:32 into the video you’ll notice the person reviewing the Dell Streak mentions this…

        “one quark of the Dell Streak is Dell opted to add a numeric key pad in a way to fill up the extra space on the screen” “maybe you’ll love it but I found it kind of awkward to offset my thumbs over the Qwerty keyboard”

        After viewing this video here I’m thinking to myself, “In how on God’s green earth did engineers let this vital information pass them by?” I mean was there not someone along the innovation pipeline who would of seen this “issue” obviously adding a numeric pad may be helping someone who needs to type in numbers on a continual basis (job) but when you here the reviewer mention that “it was a way to offset the larger screen” did they not consider maybe the option of hiding the numeric keypad in times of needing only to type letters?

        Obviously they didn’t consider that “typing on a smartphone” and making sure that my thumbs are comfortable was not a “job” in itself. But even that “discrepancy” was dismissed.

        The only reason why I went to the retailer in the first place was for that reason to see if i could type on it and still feel comfortable enough with that “discrepancy” i didn’t even have a chance, because companies like Dell, Rogers, right down to the sales person.

        The only reason why I share this story is it’s the only way to see how everyday jobs are being dismissed not because of lack of effort but lack of understanding.

        Thanks Wim for being a good teacher and making sure i can see these “discrepancies” as a consumer. :-)

  6. CEx is really an important factor in providing excellent product and services but its concept is almost always utilized the wrong way. Companies promise so much about their products but they sometimes overlook the values the customers will care about when they do decide to use what they are selling.

  7. Graham and Wim – quick question for you both. In designing a value-added experience from scratch, what is the best method to set the process off in the right direction? In the shortest time? Without a bunch of restarts? Very insightful post. Thank you. Barry

  8. Pingback: Observations why Social CRM isn’t…. « Wim Rampen's Blog·

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