A pragmatic approach to defining customer value
Introduction to the LHBS Customer Value Model
Companies tend to act, react and form strategies with their competitors in mind. At LHBS, we believe that companies pay too much attention to the competition and too little attention to customer needs. How a company ranks against it competitors, is increasingly being defined by how close a company is to it’s customers.
Creating customer value is the best competitive advantage in a world of abundant choice and shrinking differentiation.
At LHBS, we help companies identify the changing nature of demand and customer expectations and hence, new opportunities for companies to deliver customer value. Driving customer value is becoming the core of the business model and a profit driver. By delivering superior value to customers, companies can better derive value from customers.
It’s a simple exchange between value. Companies create value for customers and charge them for the value they create. We believe that any business or brand can create value for its customers in four interrelated but distinctive areas:
LHBS Customer Value Model:
Product:
Do you create products that meet a real need? Are your products designed to solve real customer problems?
Service:
Do you facilitate and deliver services that enrich and simplify the lives of customers around your core business?
Experience:
Do you make searching, shopping and interacting with your products and services a uniquely positive experience?
Communication:
Do you create content that people like to consume and share rather than advertising people want to escape from?
Why it matters:
Winning brands and companies adjust their offerings in these four areas to best meet emerging customer expectations. A higher value creation allows companies to capture more value and generate a surplus compared to their competitors. Customers do not see brands as separate components. They form perception and consideration from the interlinked combination of all four areas.
The better a company manages the interrelation between their products, services, experience and communication the more value it will create for its customers.
Key takeouts from the LHBS Customer Value Model:
- Pay close attention to emerging customer expectations and needs
- Focus less on your direct competition
- Define your company offering in the following four areas: product, service, experience and communication
- Identifying synergies for value creation between these four areas
