Bill Lee published a post on Harvard Business Review Blog Network titled: “Building Customer Communities Is The Key To Creating Value“.
In this post Lee argues that for a company to capture ‘such’ value from customer relationships requires a Level 4 Value proposition. Where ‘such’ refers to “getting their customers to advocate for them, create peer influence in their markets, and make important contributions in areas like product development“.
I believe Bill Lee is right, at large, with the statement he makes in the title of his post. After reading it though, I think he’s making this statement for all the wrong reasons and is using all the wrong arguments as well.
Wrong arguments first:
Lee describes four levels of Value Propositions:
- Level one being a commodity product,
- Level two a product or service that is perceived to get a (Customer’s) job done,
- Level three where you engage a Customer to such a level that you strengthen loyalty and retention
- And a level four value proposition being the one that offers Customers to build their social capital..
I cannot begin to explain what is all wrong with the list above. Most strikingly he makes a distinction between commodity products and propositions that are perceived as helping Customers get their jobs done.
Mr. Lee seems to think that it’s the value propositions (or products/services) that get the job done. That is not the case: It is the Customer that gets the job done, with a little help from the products or services hired to help her with it. Thus ALL products and services are proposals for Customers to help them get their jobs done, regardless if they are considered commodities or not.
Wrong reasons second
And then Lee provides four ways (and reasons) to help Customers build their Social Capital. After reading them all I can only come to the conclusion that the one and only reason Lee is proposing companies to do so, is for them to create value for themselves, not the Customer nor their friends or families. It is all about being able to leverage Customers as marketeers. Or like Lee says it himself: “What do all of these efforts have in common? They build communities that exert positive peer influence across all the relevant companies’ markets.”
Customers see right through
It’s the difference between trying to capture value from and seeking to co-create value with..
In my humble opinion that is. What’s yours?
Wim. The part of Lee’s argument that struck me as peculiar was that, after reading the four level value propositions, doesn’t it strangely resemble a Maslow-esque hierarchy? Curious lens. And, who’s value proposition is “stregthening loyalty and retention”? Certainly not the customers. Develop and delivery products and services that enable your customer’s job better than the next guy, and thats how you create joint value. Thats how you win in your market.
And…thanks for the Nike+ example. Good one. I’m a junkie. And at $120 or whatever the band is, Nike isn’t rolling in cash flow from that braclete. But, they have put themselves and the brand right at the bullseye of a passionate community and enabling that community to accomplish its common purpose of fitness, health…whatever. How’s that for value co-creation?
“don’t ask what the customer can do for you, but what you can do for the customer”. Building a community can be of mutual interest.
You totally nail it. Building communities is very far from creating advertising or doing sales. Corporate driven community can only exist if it has purpose and it brings value. Community is about co-living and that requires great consideration in order to succeed. Thank you :)
well said, communities are not for companies to manipulate, but for the users to leverage. agree.
It occurs to me that the guru’s are selling to the C-suite. And so all the customer stuff has fundamentally shaped to fit the existing organisational paradigm which ultimately is about getting customers to buy in order to make the numbers. So, when I read the arguments, I see the same old, same old: finding clever ways of getting customers to buy from the company, do marketing/selling for the company, and finding way so reducing the cost of serving the customer.
What is missing is a genuine desire to create value for the customer – value that simplifies, enriches and even transforms customer lives. As for co-creating it is hot idea and few are doing it. Threadless comes to mind. Who else comes to mind? Now get this: most organisations find it difficult, at best, to get collaboration to work inside the company. So what is the likelihood that most organisations get collaboration and thus co-creation to work with customers?
I have studied Kuhn and I am with him. The business world is gripped by a paradigm which is mainly centred around manipulating customers and extracting value. This is clearly displayed in Porters five forces model where the customer and the enterprise are antagonists. And the enterprise has to find way of diminishing customer power in order to increase revenues and profits. Whilst this model has suffered some shocks, it is still in place because it still works. Kuhn says only when this model is throughly discredited will a new paradigm take its place. Put differently, it is only when companies come along that work collaboratively with customers co-creating value, prospering and driving existing businesses into the ground will we see a change towards a co-creation paradigm. Until then it is just talk.
I am open to being challenged. And I say it is quite possible that I am wrong. Would love to hear what you have to say.
Hi Wim, great post again, couldn’t agree more. We should stop trying to influence “influence” and start seeing influence as a result of providing added value to the customer. Companies should believe in a community instead of believing that a community will be beneficial for the company.