Value is the driver of customer retention and growth
My friend Doug Morse says, “The value of a product or service is only in its intended purpose.” I further believe that:
- Value is expressed in currency units like $’s.
- Value is not created until the buyer starts enjoying the benefits purchased.
- The value proposition does not become realized until benefits exceed costs.
After these three states are met, the relationship transforms, and now the value drives retention and growth.
So what? Who cares?
We all should care because, in B2B selling (and much of B2C), the purchase of your products or services depends on how well the salesperson explains the benefits the buyer will obtain and how they compare to the purchase price. The other selling strategy is to be the lowest cost seller, but most buyers know that with low prices come lower something else like warranty, support, start-up help, features, or useable lifetime. Smart buyers want the lowest lifetime cost of ownership combined with the highest return on initial investment – they are desperately concerned with value.
What Does This Mean For The Service Executive?
I don’t know of any service organization that can make a customer happy if he purchased a crap product that does not live up to its advanced billing, i.e., it does not deliver the promised value. If the product inherently provides good value, the service organization can make it easy for the customer to reach the “break-even point” and start operating in the “profit zone.” This concept is shown below:
For the Service executive, this means that it is your responsibility to ensure that the customer realizes the promised value sooner than expected and that he is financially ahead of the game. Your organization has to understand the customer’s expected value, measure the actual value delivered, and take responsibility for closing the expected vs. actual gap. This requires a different set of skills from just performing routine maintenance and a new outlook on roles and responsibilities.
Examples:
- Before your engineer went to a customer to perform the first scheduled maintenance, he checked the files and discovered that one of the customer’s requirements was to run ten samples within an 8-hour shift. When he arrived, he learned that the customer only ran five samples per shift. He discovered the processing time was 90 minutes, not 45 as recommended. Maybe the customer would have said something, or she would suffer silently and put the instrument in the corner.
- Your customer called tech support with a question that was easy to answer. The support engineer then asked the customer to check the software revision he was using. The engineer then determined they were not using the latest revision, eliminating a few potentially severe bugs known to cause errors. The support engineer remotely updated the software and avoided the possibility of system crashes.
Both examples show that a “thinking” support person can quickly increase the customer’s value from using your products.
Planning for this new role is what service strategy is all about.
Related article: How Customer’s Unique Context Drives Value Creation
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 more value (the driver of customer retention and growth) for your customers, please contact us or check out some of our free articles and white papers here.