Your Cart
Your Cart

How to measure value for customers

This is a worthy challenge I’ve grappled with before, just check out my posts under the metrics tag. The other day I got my hands on a recently published Forrester report with the same title as this post. I cannot share the report for obvious reasons but this is my review of the highlights of the report which does share some details.

The opaque world of value metrics

The first very interesting aspect for me is the identification of four dimensions of value. It’s totally reasonable to expect that there are different ways to judge and measure value for different customers. Very few would go beyond one or two, I would venture to say.

The four they identified are (with descriptors covering positive or negative perceived value):

  • Economic. Money is gained or earned; spent or wasted
  • Functional. Objective is fulfilled with the appropriate effort; obstructed or made difficult
  • Experiential. Interactions and sensations are pleasant; unpleasant
  • Symbolic. Meaning in relation to self or others is created; destroyed

Another key point they make is that organisations often make the mistake of using flawed proxies to measure value. For example: “Common value metrics are based on measuring what customers do — like the features they use and the content they consume. But these metrics seldom align with the customers’ perception of value derived.

Many in my profession of customer success (but probably not enough because it is still so persistently used), know that feature use is a bad proxy for value.

Also worthy of mention is a point about the often incomplete picture of value organisations have where it is “scattered across different parts of the organization, collected at different cadences and using different tools”. Totally agree with this but it is probably especially true of larger organisations.

The path to clarity

Find key drivers across all four dimensions of value

The way to do this is to choose a level at which to begin defining value drivers, formulate a hypothesis of how customers derive value, use research to substantiate your value-driver hypothesis and validate and rank value drivers.

Value can be defined on three levels according to the report and each perspective is defined below:

  • Relationship: How customers derive value in their life from doing business with a firm
  • Journey: How customers derive value from a series of interactions with a firm as they try to accomplish a key goal
  • Touchpoint: How customers derive value from interacting with a firm in a specific, discrete contact

Several really useful research techniques are then described, including there effects and with examples. Most interesting for me was the use of ethnography and jobs-to-be-done analysis. Pros and cons of different methods for validating and ranking value drivers are also explored in depth.

Decide how to measure the value drivers

Covers how to assess which existing data sources could be a good fit, adapt existing data collection efforts to improve fit and define new value-data-collection approaches.

Also considers survey alternatives which lower the survey burden on customers and avoid possible bias in survey results for value drivers. A very good idea I’m sure you’ll agree, if you have ever been bombarded by survey requests from the same company or responded in a less than considered way. I know I have.

The report also presents a really handy table through which to pick a measurement approach per value driver that is suitable and viable. It covers surveys, unstructured feedback, operational data and financial data and maps those against suitability, viability and burden on the customer.

Prioritize and close value gaps

This section focuses on identifying and ranking value gaps, considering competitive performance to help pick tactics for closing gaps and developing value optimization strategies with stakeholders.

It presents a matrix to identify which value drivers to focus on, maintain, reconsider, or ignore based on importance and performance. It then uses an analysis of the potential gain in customer value to further prioritize value drivers based on various scales.

Recommendations and outcomes

The report closes with a section on recommendations that suggests co-creating value measurements with select customers which I think is a fine idea and a way to validate them. There is a series of steps to help guide whether and when to do this and then how to go about doing it if you decide to.

It ends with a view that new value practices will emerge as a result of engaging more deeply with what customers really value and determining whether you help customers get value or not. Specifically, we’ll see that:

  1. Firms will innovate around waves of value.
  2. Design teams will style themselves as value creation teams.
  3. The CX toolbox will get a makeover to focus on value.
  4. Journey design will feature value reminders.
  5. Firms will form value contracts with consumers.
  6. Value for customer will become central to company scorecards.

I think these last few points on what could be are tantalising and largely I agree with them all. I especially love points 4 and 5. I cannot believe the implication that point 6 is not already the case but depressingly I would say they are right and will be delighted when true for all companies.

Leave a Reply

%d bloggers like this: