There is one thing that will drive business people crazy in 2017. This is the turf war between functions and departments in their own businesses. Why on earth do you fight internal battles when the real war is out there in competitive environment?
When you cut away the crap, the euphemisms and excuses for lack of internal cohesion alignment and performance you are left with one blindingly obvious problem. It’s not organisational culture, its not business structure, not lack of innovation, poor financial management, or any of the myriad of symptomatic challenges and issues that businesses face.
The one issue that causes the most dysfunction in any organisation are the assumptions that each and every individual in the business makes about Value and how those assumptions then drive the actions and conversations in the business about what customers need and the solutions that will help them.
In the soundbite world of management one the the beauts is the use of the term ‘added value’. Wow! that sounds so ‘top management’ doesn’t it. Use the phrase liberally and you infer to your listeners and readers several things…you are giving the impression that you are someone interested in creating something better and extra (usually for customers and it could be for other stakeholders too like lending banks, funders etc) you also give the impression that you are value savvy, that you have special insight into what is needed by customers and markets which in turn then drives every single commercial decision downstream from product and service innovation and development, organisation structure. pricing, communications. Use of the term also shows you as a ‘member of the management club’ perhaps with an MBA. It shows you know how to talk the talk. It means you use management speak in a way that suggests you have a superior way of going about management compared to others less educated and experienced.
Now can anyone see a problem here?
How the bloody hell can you talk about ‘adding value’ when you haven’t defined and clarified exactly what is meant by the term ‘value’ in the first place? What sort of value are we talking about? Value for who? When will the value be realised or crystalised? Is the value constant? Is the value multi-faceted? Is the value embedded in the product or experienced through service and relationships? What if its both? What if value only happens in use? How is value c0-created? What is the context in which the value is to be created and delivered? Is value for a patient the same as government? Is value for a higher education student the same as a secondary school pupil? Is value the the same on Monday morning and Monday afternoon? Is value the the same for a consumer and a business customer? Do you really want people in your organisation to ask What the hell does this have to do with anything?
Successful senior executives spend time and energy on getting a deep understanding of value. They realise value is a fast moving ever changing target. So the one thing that will drive them crazy is when you can’t be arsed to put the same time and energy into to justifying your proposals and ideas with a solid well informed understanding of value. Value to the customer, value to other stakeholders, value to the firm, and value in context.
Simply put to stop your boss going stir crazy in 2017 you need to be a Value-ologist
Someone is an expert in Value-ology. Someone who really gets what what value means for your business and is able to craft a compelling vision of future value through a relevant value propositions and proposals.
You can learn more about ways to create, deliver and communicate value in:
Can anyone tell me if they’ve come across any new earth-shattering insight about marketing that hasn’t been discovered already?
Marketing is all about new ideas
The impression of marketing given in social media is that it is a profession that is forever in a state of flux and that if you don’t keep up with change you are doomed to failure.Well there’s an old trick for a start! Fear sells – terrify your prospect that their future career or business is in jeopardy if they don’t take on your ideas.The principles of marketing are enduring and are unlikely to change. This is because they combine into a particular managerial world view. What Thomas Kuhn called a Paradigm.
Marketing is all about old ideas
Now the thing about paradigms is they create acolytes. Acolytes are people who are introduced to the mantras and creed of a world view and fall in love with the paradigm because it makes sense of the world in a way that was hidden to them before. The paradigm is so helpful that the acolytes then evangelise about it (tell every and anybody that it is ‘the way’ and the only way and all other ways are wrong.
People new to marketing are initiated into the rites of the marketing profession, its principles methods and language. Many of these people are at the early stage of their commercial career others may come to marketing mid-career whilst studying an MBA or similar.
Seasoned business professionals are rarely taught anything fundamentally new about marketing – they actually know it all and practice it’s principles instinctively.
Of course other paradigms come along to replace prevailing ones but only when a completely new way of seeing things is put forward. Views such as Service Dominant Logic might be classed as one and the ideas published in the area of Critical Marketing. Everything else I read about concerning everyday marketing management and problem solving sits within the conventional marketing paradigm.
So whilst I read a lot about new techniques such as the application of social media in marketing activities, and trends such as the importance of story telling for brands, because I’ve been around a while I don’t actually see anything truly new in terms of everyday marketing management thinking. Let’s check a few of the marketing stalwarts out.
Marketing’s old ideas
Customers buy benefits not features
There is a difference between need and want
Brands are a promise of value
Customer segmentation and targeting is an effective use of scarce resources
Make the marketing mix relevant to the target customer
Firms need meaningful differentiation to compete
Customer centricity should be your focus
Keep an eye on your competitors
Plan what you by following the structure; where are we? where do we want to be? set out how to get there, and measure your effectiveness
Don’t give profit away
Have a dialogue with your customers
Changing the logo is not changing the brand
Some customer aren’t worth doing business with
Have I got this wrong? Are there any new principles you would teach new dogs?
I bet one of the first things you would say is ‘well it depends’ and by saying that you are acknowledging something crucial and fundamental about this thing we call ‘customer value’. Saying ‘it depends’ means we recognise that value is unique to the person who decides the value and the circumstances in which they are making the decision.
So in the case of the rusty old Volkswagen Beetle like this one the scrapyard dealer might be thinking of the monetary value of the scrap metal, the VW owner who needs a scarce part might be thinking how their break down problem has been solved now that s/he has found a rare engine part, the car renovator might be thinking about how perfect the car shell is for their next custom car project, the grandson tracing his family history might over the moon that he has finally found his grandfather’s car that he drove around Europe in the early sixties and met the woman who was to become his wife. What we ‘get’ for our money is so much more than just the thing itself.
2.Put value at the heart of every marketing conversation you have
As a cornerstone of business activity in general and marketing management in particular understanding value is the primary commercial concern. Marketing shorthand for value is typically ‘the benefit’ or ‘the solution’. It is so fundamental that almost everybody in a firm from the tea boy to the CEO has a view about what the customer values. If you don’t deeply understand value as a concept and what value in particular means to your customers your chances of success are greatly impaired.
3.Make value the touchstone of every marketing decision and action
Understanding value seems so obvious it hardly warrants further comment and so marketers often give more time and attention to marketing implementation rather than making sure actions are aligned to fundamental value drivers. Marketers can easily end up focussing on the interesting rather than the important. To paraphrase Peter Senge when they do this marketers run the risk of chasing the latest fads thinking they are being proactive when all they are doing is reacting and overlooking fundamentals.
4. Cover all the value bases
Over the years it’s become clear that the idea of value is a multi-dimensional constantly moving target. It is unique to each and every customer, it is relative to the competition and it is a weird mix of the monetary, functional and meaningful. For that reason it’s probably one of the most challenging topics in marketing.
Key thought leaders who have produced value definitions and frameworks include:
Park, Jawarski, and MacInnis (1986) from function to experience
Valerie Zeithaml (1988) from give to get
Robert Woodruff (1997) from product attributes to satisfaction
Sheth Newman and Gross (1991) from function to social
Morris Holbrook (1998) from efficiency to spirituality
Ulaga (2003) from attentiveness to expertise
Khalifa(2004) from trade off to means ends
Brock and Colgate (2007) from money to symbols
Value is a complex combination of different things.
Some are more important in b2c and others more relevant to b2b. The important thing to note is that it is a blend of these things, unique to each customer and each market situation. This means value is never fixed and constant.
Key value elements include:
Economic value – what is the asking price or utility of something
Perceived value – what you think something is worth
Relationship value – how much a long term and close trading worth
Experiential value – how interacting with your brand feels
Symbolic value – what something means
Knowledgable value – how helpful something is in improving life and business in general
These different facets of value engage the purchaser in both rational and emotional decision making simultaneously. The big debate in b2b is just how much purchases depend on objective financial factors and how much on subjective factors such as relational warmth. Is clarifying what value actually is on your marketing agenda.
5. Don’t confuse Values with Value
There is a lot of contemporary talk in professional marketing circles about moving from attribute to values based marketing. The idea here is that if you tap into the psyche of customer by understanding their deeply held beliefs and life goals this is more relevant persuasive and influential than addressing economic, functional and perceived value. We claim that choosing either attributes or values presents a false dichotomy. In practice it’s not really the case of choosing either attribute or values based marketing. Also in a b2b context there might be a very clear need for specific technical expertise, or financial attributes that are deemed of immediate value rather than a more values based value view of purchase drivers such as loyalty or trust.
Value and values are of course closely related. The distinction needs to be made clear nevertheless. Frequently people hear the word value being mentioned and proceed to talk about their company values. Value is what is the customer gets (which might include resonating with personal values). Values on the other hand are the profound beliefs that people hold which guide how they act in the world. Value and values are not the same thing. Is distinguishing value and values on your marketing agenda?
6. Ensure everyone in the team has the same take on value
One of the most frequent problems we hear about when working with organisations is that there is a problem with communications. People don’t keep their colleagues informed, there is a lack of feedback or information is simply not shared.
These things obviously create communication challenges however there is something much more profound about how we communicate that is often overlooked. That thing is declaring your assumptions or explaining where you are coming from. We take our assumptions for granted and so we often don’t bother talking about them or revealing them to others. People tend to rush into selling and enthusing about their ideas and proposals without establishing a baseline of understanding. They assume they are talking about the same thing when often they are not. One person may be talking about economic value and the other about symbolic value; another may be referring to value and the other to values. Always be clear about ‘what’ you are talking about. Is understanding different internal value perspectives on your marketing agenda?
7. Avoid customer worship
The establishment of marketing philosophy and principles in the management psyche is probably one of the most successful selling jobs ever.
Marketing speak is everywhere, people who don’t even work in marketing talk of brands, positions, segments, targets, benefits, competition and differentiation. Where there is talk of customers instead of patients, where there is talk of customers rather than students, where there is talk of customers not citizens that’s marketing talking. Philip Kotler crystalised the idea that marketing touches every aspect of life from business, hospitals, schools and churches in his 1972 article The Generic Concept of Marketing. We can call this the marketisation of everything and the assumption that this is obviously a good thing, but is it? Customer centricity is a key marketing idea.
Customer centricity is epitomised by the idea that the ‘the customer is king’. If you are not careful this can lead to customer worship and the potential of going out of business. I worked many years in the gambling industry. When we researched players they always said they wanted ‘the jackpot’ every time they played a slot machine. Did we give the customer what they wanted? Of course not! Value has to be created for all parties for the deal to work. The players were given a win chance and a run for their money and the slot operator got a profit per game played. Esteemed marketing expert Evert Gummesson recently called the pursuit of customer centricity a wild goose chase. Getting the balance right between the value the customer wants and the value the supplier needs is called value appropriation.
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8. Deeply understand value in use and value co-creation.
How many people in your firm actually know what co-creation of value means?
Do they really understand the principles of The Service Dominant Logic of Marketing proposed by Robert Vargo and Stephen Lusch where the notion of co-creation was first presented?Many marketers use the term co-creation to mean working with the customer to develop new products and services. For sure an element of joint or co-creation takes place. Often this is called co-production too.
When talking co-creation of value Vargo and Lusch mean something else entirely. They challenge the very basis modern marketing management by claiming that the whole profession is built on focussing on just one, very particular, idea that philosopher and economist Adam Smith had about value. This idea was the exchange of value which he set out in his book Wealth of Nations. In this treatise Smith made the case that for nations to grow their wealth in the global economy they needed to add value by the production of products which is then exchanged for money by exporting to international markets. The idea of value exchange has been the basis of marketing ever since.
Adam Smith was making a specific economic case in relation to exporting; as a philosopher Smith also understood that value was only really co-created at the point of consumption. So we have value in use rather than value in exchange. Their point is subtle and important.
The claim that value can only ever be created in the moment of use means that value creation is reciprocal – in other words co-created for the supplier and the customer at the same time not passed from one to the other. Value therefore cannot be ‘added into’ anything and embedded by the supplier prior to purchase. Thinking about value in use ensures that firms don’t run away with a technological or product perspective and always focus on the value the customer will derive when the solution that is offered is used. Co-creation is not really about co-development.
9. Remember you are always aiming at moving target
Can we ever really know what the customer wants, needs or values at any point in time? Sure we can have broad idea of the sorts of problems and aspirations customers have and sure we can propose generic solutions to satisfy what the customer might be seeking. But can we actually know in advance what is driving a particular customer purchase? The context of every purchase is unique every time. Only the customer can decide what is relevant to their situation and so this means that businesses can only propose value. What this means is that being continuously tuned into what is relevant to your customers is vital. This is what makes face to face interactions in b2b marketing so important. Without relevance your marketing efforts run this risk of missing the target. Is solution and value proposition development for value in context on your marketing agenda?
10. Create, deliver and communicate differentiated customer value with Value-ology
Last week myself and some colleagues from Sheffield Business School attended the IMP Conference on business to business marketing at Poznan University of Economics in Poland.
For over forty years the ideas of IMP research and thinking have influenced business study. In particular the IMP perspective explains how business works from a network perspective rather than a strategic management perspective. Central to this view is that business is all about interactions between different companies (and their people), interdependence between various businesses that bring products and services to customers and relationships that endure over the long term rather than one off transactions. When such networks work well value is created for all participants in the network
So does any of this stuff really really happen in the practice of even the smallest of businesses I asked myself. To find an answer I looked at my son Alex’s Interior Design and Development business AJ Interior Developers Plymouth UK.
I was inspired to think about his business after viewing his Instagram pages and thinking how social media has shaped customer interactions and relationship building. It also helps with an idea from Service Dominant Logic which states that people like Alex can only propose the value of their service. The customer creates value afterwards through the use of the new home spaces he creates. The use of pictures of not only his finished work but work in progress too conveys to customers his skill and professionalism before they have experienced it for themselves. Instagram helps overcome the problem of service intangibility and invisibility.
His use of a Short Instagram video adds a different dimension to interaction as well because it brings some personality into play and stimulates the imagination of the customer to the possibilities for their own home.
In order for the customer to have a smart new home space Alex is plugged into a whole network of other people and businesses. Kitchen design companies like Wickes and Homebase, a referral network, specialist co-workers like gas engineers and building regulations, parts and raw material suppliers and so on. Everyone in the network is interdependent on the others. The situation is a lot more sophisticated than just ‘supplier – customer’.
The customer value that is created encompasses all of the dimensions of value that we talk about in our new book Value-ology. There is economic value regarding the price of the new space, perceived value regarding how the customer sees the new space such as their attitude to colours and fittings, then there is relational value regarding the service given by Alex and then there is experiential value that relates to how the customer feels about the installation experience and eventually living in and using the newly created space.
So does the sophisticated thinking of IMP academics work in practice? For sure and that should hardly be surprising as the academics who form the IMP community are deeply interested in the everyday world of business and not just speculative theorising. Without real world business there would be no IMP. For me Alex’s business is a classic demonstration of the IMP principals that underpin value creation for sure.
Maddalaine Ansell, CEO of the University Alliance, appears to agree with the latter in her prediction that the HE Bill will take the sector to calmer waters. Ansell’s premise is that there will be a benefit from having all legislation relating…
Author James Allen describes ‘energy vampires’ who create diversionary none value add activities.
These activities however well intentioned adversely diminish the energy and action that should be devoted to the creation of customer value.
Of course most organisations need some systems and processes to function. Sociologist Max Weber pointed this out years ago. The problem occurs when bureaucracy becomes self serving and self perpetuating. Bureacracy can be characterised by mindless demands for information, defensive records of decisions and actions – ‘just in case’ something bad happens, a form for this a form for that, multiple sign off forms, lots of data creation and little insight and information agility.
I would recommend any business person to read his work to see what can happen in large organisations when the value creating imperative of the business is smothered by bureaucracy.
One on the central themes in our forthcoming book Value:ology is about the value creating and proposing capability of people in your company. With Co-authors Simon Kelly of Sheffield Business School and Stacey Danheiser of Shake Marketing we emphasise that without a dedicated focus on value creating activity you will waste time, money and energy on irrelevancies.
So can you spot the tell tale sales of value smothering in your business? James Allen gives a clue when he says watch out for people that:
‘….fire off lots of missives that force your people to stop serving the customer and instead respond to yet another information request’
One of the big ideas in brand management is the creation of brand love. This is where the solutions you sell and the customer relationships and experiences you create result in customers who are passionate and committed to your brand.
But have you stopped to really think through what generates this passion and commitment in the first place?
The only way customers will love your brand is if it delivers value in a way that matters to them. True value resonates with your customers. This means you need to be tough on value in your organisation to prevent it being treated as ‘taken for granted’ or ‘glossy rhetoric’.
Adding value and creating customer value are often snappy sound bites that are very easy for people to buy into.When this happens you could have a serious problem when it comes to establishing what value means for your business. Ask yourself honestly; does everyone in the organisation have an aligned view on what are people talking about when they talk about value in general and customer value in particular?
Get tough on value conversations in your organisation by doing three things.
Don’t confuse it with satisfaction because that is only about after the purchase. It says a lot about wants and little about real needs.
Don’t confuse it with quality because that is about technical standards.
Don’t confuse it with your values because they are about you and not the customer.
Are you sure your team knows the difference?
Organization psychologist Kurt Lewin said there is nothing more practical than a good theory. He said this to make managers realise that an assumption has a direct influence on practice. Mistaken assumptions about ‘what’ value is results in irrelevant marketing implementation.
You can think of defining value in your business as just as important as NASA getting the trajectory calculations right for a space exploration vehicle such as the Mars Curiosity Rover. Even a small miscalculation on launch could have resulted in Curiosity missing big the red planet by thousands of miles.
Let’s say you assume that the primary benefit your customer is seeking is the best price. This might seem reasonable because the customer always mentions the price in conversations. Acting on this assumption could lead you to being way off target. Deeper understanding of the customer through careful unpacking of what is going on in their business world reveals that they value your detailed expertise and network of suppliers which means the relationship they have with you helps them compete in their market more effectively. The real value is in the supplier relationship not in the price.
If you don’t ask tough questions about what people mean by value then there is a very real risk your plans, product developments and campaigns will be off target. Worse still you’ll get locked into a cycle of repetitive problem solving as one thing after another is tried in the elusive hunt for customer value.
Barbara Caroll and Aaron Ahuvia in their article Some antecedents and outcomes of brand love – Market Lett (2006) 17: 79–89 define brand love as “the degree of passionate emotional attachment that a person has for a particular trade name.”. A definition such as this is helpful in focusing attention key brand love attributes.
The challenge for the professional marketer of course lies in creating specific actions that predispose the customer to fall and stay in love with your brand. It’s issues like this that are at the heart of the work my publishing colleagues Simon Kelly of Sheffield Business School UK and Stacey Danheiser of Shake Marketing USA address when they talk of the need to create resonant value propositions and ensure that sales and marketing activities are aligned.
Brand love needs a bit of tough love too.
If you are interested in the academic research into brand love then the following might be of interest:
Fournier, Susan (1998), “Consumers and Their Brands: Developing Relationship Theory in Consumer Research,” Journal of Consumer Research, 24 (4), 343–73.
Albert, Noel, Dwight Merunka, and Pierre Valette-Florence (2008), “When Consumers Love Their Brands: Exploring the Concept and its Dimensions,” Journal of Business Research, 61 (10), 1062–75
The thing that will drive senior executives crazy in 2017 //giphy.com/embed/3o6Zte3WGAI1o7aUEg via GIPHY If there is one thing that will drive senior executives crazy in 2017 it will be the turf wars between functions and departments in their own businesses…
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