Co-create customer value with social interaction 

One of the central ideas we cover in our marketing and sales book Value-ology is the art of value proposing as a central aspect of consultative selling in key account management and professional sales.

Value proposing is what sales and marketing people do when they are crafting and pitching a value proposition in face to face customer situations. A value proposition is a thing whereas value proposing is a behaviour.

A fascinating article in the HBR blog Emotional Intelligence has 12 elements handshakes our research in Value-ology that  social intelligence is an essential competence of experienced and credible b2b sales and key account management executives.

In our book we call the social domain the ‘missing middle’ of sales and marketing management understanding. Something so obvious (people deal with people) that it hardly warrants much examination.

We have found that careful attention to the social contexts of supplier – customer interaction can be difference between success and failure. In Value-ology we describe four social contexts that matter in business:

Approaching, Incorporating, Unfolding and Relating. Each of these demands a different and particular way of behaving and speaking. If a sales and marketing executive reads these wrong it can directly result in the loss of business.

Co-creating customer value requires dialogue. The sharing of thoughts and ideas to improve understanding. Do this in a pro-social way with commercial realism and your bottom line will increase.

Is your marketing built on customer value insight? 

Okay! So sou might know what your customer’s need but do you know what they value?

Watch this YouTube introduction to see what I’m talking about Value-ology

Meeting a need is solving a problem delivering value is being relevant.

Academics Vargo and Lusch describe value as idiosyncratic, subjective and  meaning laden. This means that value is a moving target that is only ever determined by the customer. A supplier can never tell a customer what value is.

Suppliers can only ever propose value. That’s why of all the marketing tasks a CMO has to do the creation of a value proposition can be the difference between success and failure. Your offer has to address some matter at hand in the world of the customer.

Your products and services will of course be designed to solve a problem that is generally understood. Zoning in on value means improving your customisation.

Value-ology is packed full of thought provoking ideas and practical tools that can transform your marketing and improve your ROI

Is marketing simply teaching new dogs old tricks?

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?

10 customer value essentials for creating effective value propositions

Create effective value propositions by deeply understanding the nature of customer value

  1. Always think ‘it depends’
  2. Put value at the heart of every marketing management conversation you have
  3. Make value the touchstone of every single marketing decision and action
  4. Cover all the value bases
  5. Don’t confuse Values with Value
  6. Ensure everyone in the team has the same take on value
  7. Avoid customer worship
  8. Deeply understand value in use and value co-creation
  9. Remember you are always aiming at moving target
  10. Become an expert in art and science of Value-ology

1. Always think ‘it depends’

How much do you think this car is worth?

vw-beetle-rusty

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

If you want to learn more about the essential topic of customer value in business to business and more about methods of implementation and capabilities to make things happen discover further ideas and insights in our forthcoming book Value-ology – Aligning sales and marketing to shape and deliver profitable customer value propositions due for release by Palgrave Macmillan January  2017

Interaction, interdependence and relationships : creating small business customer value. 


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.

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