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. In other words, take care of your customer’s customers. It sounds convoluted, but it is a real “value adder.”
Customer Value
There are two kinds of customer value:
- Internal – cost reduction, productivity improvement
- External – increase revenue, improve the end user’s value
Traditionally, when we talk about 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 translate into value for your customer’s customers 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 in hospitals and physician offices is getting more complicated than in past years. And, as taxpayers and consumers, we all favor this situation. Today, healthcare buyers are focused on two purchasing arguments:
- Cost savings (internal)
- Improved patient outcomes (external)
How does a service organization help improve a patient’s outcomes? It is easier than you think. A surgeon told someone I know to go to Boston for 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 needed.” 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 monitors the imaging system’s output and identifies and delivers the 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 failing?
If a diagnostic instrument is not producing valid results, the patient must have another test at best. 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. 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 injuries like a cut.
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? Why do the packers and customers put up with this situation? Would customers be willing to pay more for an easy-to-open package? I would! And the product seller would love a differentiated offering built around ease of opening. Sounds to me like a win-win-win situation.
Six 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. Do some market research and find out the critical issues you heard about in step 1 and what other cases they have but did not mention. After you get a feel for the problems to solve, visit your customer’s customers.
Step 3. Go back to your company and brainstorm with the most creative people. Keep identifying opportunities and narrow the list until you determine 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. Value creation is an ongoing process and must become part of the organization’s DNA (sorry for this trite sentence, but it fits.) Bask in the glow for a day or two and repeat step 1.
A related article about creating a customer retention strategy – Every Business Needs a Service Recovery Strategy – Here’s How to Make One.
About Middlesex Consulting
Middlesex Consulting is an experienced team of professionals with the primary goal of helping capital equipment companies create more value for their clients and stakeholders. Middlesex Consulting continues to provide superior solutions to meet the needs of its clients by focusing on our strengths in Services, Manufacturing, Customer Experience, and Engineering. If you want to learn more about how we can help your organization create value for your customer’s customers, please contact us or check out some of our free articles and white papers here.