The key to long-term growth is to create value for your customer.  One often forgotten strategy is to help your customer create value for their customers.  Sounds convoluted but are a real “value adder.”The key to long-term growth is to create value for your customer.  One often forgotten strategy is to help your customer create value for their customers.  Sounds convoluted but are a real “value adder.”

Customer Value

There are two kinds of customer value:

  1. Internal – cost reduction, productivity improvement
  2. External – increase revenue, improve the end user’s value

Traditionally, when we talk value to customers, we talk about internal measures.  For example, customer service people selling service contracts focus on either maximizing uptime (productivity) or lowering costs by not paying for the services individually (cost reduction).

What would happen if we talked about helping improve on-time customer delivery?  This would clearly translate into value for your customer’s customer since they could reduce stock levels, improve scheduling, and provide a better overall experience to the ultimate end user. The end users would buy more, your customer would sell more and your business would be recognized as at least part of the reason for all this good fortune. This is a win-win-win situation.

Examples of taking care of your customer’s customer

Healthcare

Selling products and services into hospitals and physician’s offices is getting much harder than in past years.  And, as taxpayers and consumers, we are all in favor of this situation.
Today, healthcare buyers are focused on two purchasing arguments:

  1. Cost savings (internal)
  2. Improved patient outcomes (external)

How does a service organization help improve a patient’s outcomes?  It is easier than you think. Someone I know was told by a surgeon to go into Boston from an X-ray.  He asked if he could have it done at the local hospital and the surgeon said, “Today I saw a patient that had an X-Ray from Hospital Z and it was so blurry that I could not make out the details I need.”  So, either their X-Ray equipment was defective or their imaging team needed additional training.

Hospital Z’s service contract covered a defective instrument but who is monitoring the imaging system’s output and identifying and delivering training?  Why isn’t this part of the service contract?  How much business is Hospital Z losing because it has a reputation for poor quality images?  Does Hospital Z even know how much it is losing?

If a diagnostic instrument is not producing valid results then the patient, at best, has to have another test.  It wastes some time and probably results in another needle stick.  But at worst, the doctor makes incorrect diagnoses and prescribes the wrong medicine. Both examples result in an unacceptable patient outcome that varies only in degrees.

Consumer goods packaging

This picture’s title is “wrap rage.”  In the consumer packaging profession, it is well known. (A Google search on “wrap rage” yielded 1,620,000 results.)  This emotion is generally exhibited when a consumer attempts to remove a small purchase from its blister pack and, more often than not, sustains minor injure like a cut.

Why do the packers and customers put up with this situation?  What would happen if a packaging equipment system supplier developed an easy to open package that achieves the same levels of security and protection as the ones we all know, and has a minimal impact on cost and selling price?  Would customers be willing to pay more for an easy to open package?  I would!  And the product seller would love to have a differentiated offering build around ease of opening. Sounds to me like a win-win-win situation.

6 steps to identify opportunities to add value to your customer’s customer

Step 1.  Talk to the people in your customer’s business that deal with customers and their complaints.  These are not typically the people who buy your products.

Step 2.  After you get a feel for the problems to solve, go visit customers of your customer.  Do some real market research and find out how important the issues you heard about in step 1 are and what other issues they have but did not mention.

Step 3.  Go back to your company and brainstorm with the most creative people in the place.  Keep identifying opportunities and then narrow down the list until you identify the best opportunity.

Step 4.  Make a prototype and take it to the people at your customer who you talked with and make sure you are on the right track.

Step 5.  Repeat steps 3 and 4 until you have a solution that your customer is ready to buy.

Step 6.  Bask in the glow for a day or two and then repeat step 1.Value creation is an ongoing process and must become part of the organization’s DNA (sorry for this trite sentence but it actually fits.)