Podcast Episode #8: Value Pillars: How To Get Unrivalled Value

Hi and welcome to the Key Customer Growth Podcast. My name is Jermaine Edwards and I have become obsessed with customer behavior and how people and organizations win with their best customers long term. After starting, failing, and growing my own companies, 30 customer growth projects, hundreds of strategies, and the study of 50 years of customer service research, I've seen firsthand how and why organizations win, lose, and win again with their most important customers. This podcast is my way of sharing those insights, failures, principles, and strategies so you can become what I call an Irreplaceable Advisor, someone so valuable your customers never want to leave. In an increasingly competitive world, how do you continue to deliver unrivaled value and deepen those most important customer relationships? Join me as your customer growth guide, your Your journey starts here.

Hey, this is Jermaine Edwards, your customer growth guide, and yes, this is episode number 8. And every single week I really enjoy getting to talk about some of the most interesting, difficult, some topical and controversial, and sometimes undervalued customer topics today. Today we're going to speak about value and go a little bit deeper than we did in Episode 7, thinking about how organizations really become masters of their value, how they become a kind of organization, a team, an individual that produces unrivaled value that their customers really want to scratch their eyes out to get. That kind of value I'm talking about, and really it's a process, it's a way in which we think, it's a way in which we behave, the habits and disciplines we create, the way we think about the activities that we do with our customers. And so we're going to explore why we need to think differently about value. We're going to explore something called the 4 Value Pillars and how to use them to begin to create that kind of unrivaled value in your marketplace. And then one activity you can do specifically this week or any week to master value in your business. Just a single activity to begin that process. So a bit of a question here. So if you were challenged by a customer to deliver more value each week, each year, whatever that might be, what would your approach be? What specifically would you do to meet that expectation? Because that expectation exists whether or not our customers have actually articulated that to us in that way or not. They're looking for a specific kind of value and to really to verify that the relationship they have with you is still the right one to have. So each month, each week, each year, we need to be thinking about these things. And so you might, you know, perhaps begin by trying to identify what value means to your customer, which is really important. Or you might look at some of the objectives your customer has, their business, what their trying to achieve and then identify some of your existing solutions that might support them. That might be a way in which you think about value. All these things are positive things to do. However, it won't let— it won't get you to the place of being the number one choice in your marketplace for your customer at all times, particularly in the marketplace where we know skepticism is high, uniqueness is pretty rare, and non-existent, and it's now easier than ever to move to another provider, we have to be really cautious that we're not making too many assumptions, one about our relationships, but about the value we're actually producing to our customers. So we cannot really become more to our customers if we have the same level of thinking as everyone else. We must become more and adopt what I call irreplaceable thinking. So it's a way of thinking that allows us to think more about value as something that we master rather than just something that we do. So to begin this process of Irreplaceable Thinking, we need to be aware of the value chain of our business. And this is especially true when it comes to managing and growing our most important customers. The activities that we do with them and for them And together, these should all be part of weekly team and organizational conversations. We should be evaluating the impact of our value, reviewing the effectiveness of that delivery, accessing new levels of that value, and translating that into a proposition or result that your customers would spend more to get. So a question then: how much time do you devote thinking about the areas that impact the way you deliver value to your customers. It's a really important consideration here because the amount of time spent is not necessarily just the thing that you want to consider. It's the thinking on the areas that impact the way you deliver value to your customers. How much time do you think about that, then the impact of that for your customer? And I've given presentations to a lot of leaders, I mean, perhaps even thousands now, sales and customer leaders. Every time I ask people to show their hands on this question, I get varied results, but very, very often I get less than 60% of the room holds their hands up and say, hey, yeah, we, we have these conversations regularly. And when we go a bit deeper, we recognize that those conversations aren't always as effective as they would like them to be. So where do we begin? Well, let's start with what I mentioned the value chain. So what is that exactly? So in every business there is a value chain, a set of activities that a, a company operating, you know, in a specific industry performs in order to deliver a really valuable product or service to the marketplace. So we can use a range of business principles and models to support our thinking around this. And one of them is Porter's Five Forces, and perhaps one of the most famous and robustly tested frameworks for reviewing the components every business has, you know, to monitor and improve the delivery of its service and products at a cost and a price that is profitable. So a way in which we think about reviewing all the components of our business to monitor and improve how effectively that— how effective that delivery is of our service and product at a cost and a price that's profitable to our customers, to us obviously, and for our customers at a good price. So within this whole idea of the Five Forces or Porter's evaluation of the value chain, there actually sits this unseen area which I call the Four Pillars of Value. And these Four Pillars define the categories of how almost all value is thought about and all value is considered. So in this episode, we're going to look at just exactly what these are. Now, before we get there, I need to give you my definition of value again, which I talked about in that— in Episode 7, and it's your ability to provide a relevant, sought-after, personalized outcome that delivers a specific result based on the present and future practical and emotional needs of your customers. So it's very very specific, and I suggest you might go back to Episode 7 or maybe come back and listen to this again to really get it into your own psyche, but it's your ability to provide a relevant, sought-after, personalized outcome that delivers a specific result based on the present or future practical and emotional need of your customer. Now, this is an ambitious statement, but essentially it's what the value disciplines are designed to help you do. So once you've identified the value, the way in which you do that are the value disciplines. We talked about it in episode 7, but a way in which we create an environment for how we view our value and how we increase the impact of our value comes through these value pillars. So let's explore those things right now. So the value delivery pillars, the 4 pillars, are the primary pillars that allow all value delivered to customers in the marketplace to be categorized into. And these are, by the way, it's working your business or not working your business, intentionally or unintentionally working your business, and they shape and reshape how our customers we view our relationships and how they experience our business results. It shapes and reshapes how effective we are at deepening these customer relationships and providing real business results. And these pillars impact actually all areas of the value chain too. And in most organizations, we don't think about value as individually connected areas that we can influence, but they are. So if we embrace this thinking, this will really transform the way we design and deliver results that are insanely attractive to our customers. So if we know that value by itself, the different ways, the different pillars that I'm about to explain, are— can be activated individually, but actually when they are connected together These are areas that can have significant impact, but we can influence the individual— the pillars themselves individually. So the first of this here, so the first, there are, you know, 4 observable value pillars that are seen in 3 functions. So Function 1 is Direct Value. This is what benefits a customer can experience immediately or for a set period of time. So these are the areas of Pillar 1, which is value adding. So what you do with your products and services to help your customers gain a result or eliminate a pain. So let me give you an example. So working with a digital agency that was really doing some great work with its customers in helping them to, you know, really create beautiful collateral that their own customers, customers would enjoy. And they looked at all the different areas within the customer journey and the process, all the ways in which they provide specific things to enable the customer to have a really good experience and adopt the product well. And so what they saw was that the customer, uh, it's really kind of looking at the whole journey. There were about, you know, 40-odd different places which they were adding value, whereas education, it was certain kinds of emails, it was templates and PDFs, all different kinds of things that were essentially adding value to them, ways in which a customer can realize a result or you eliminate a pain, adding to this specific product or service. Now, once we looked at it and evaluated it, we simply asked ourselves the question, which areas of these pieces of value have the most impact to the customer and why? So we began to look at it, we recognized there was actually a really interesting curve of when a customer needed something specific and when they didn't. And although the areas of value that they had were helpful, they weren't always useful to a customer because the timing wasn't right. And so therefore, although it was helpful, the customer wasn't seeing the value in that particular resource because it was given to them at the wrong time in the journey. So what they began to do is simply just identify what is the common journey a customer is taking when they need something specific to achieve a really specific goal or result within their business. In that adoption cycle at the beginning and at the end after things are implemented and things are— people are working on the actual tools, what is happening? And as we did this exercise, what we began to do is simply mark the places literally mark the places, the actual time, days, months when it happens. And all of a sudden, not just adoption went up by about 30-40% with these customers, but actually they started to get proactive feedback from the customers on a regular basis of just how helpful these tools were in the education that they were providing. And actually increased the likelihood of, of renewal at the end and actually increased their referral rate from these customers as well because of the way they managed manage the service. So there are huge benefits in simply asking yourself the question, where are the places that the customer is getting the most value from us, and where aren't they, based on the resources that we're sharing? And let's go back and think about the timing and where you might put that. That's all about value adding, and it's significant. You can literally completely reshape the relationship just by looking at the timing, increase your ability and referability with the customer, support your renewal at the end, but also importantly ensure that the customer really has the results that they want. The second part to direct value, that function, is value creation, and that's really about identifying and designing a solution based on the insights of what we know about our customers. Their market, their goals, allowing us to deliver a really unexpected benefit. So there's actually a really interesting example here. So I got a chance to work with a manufacturing company producing silicone products, and they're in a marketplace which essentially 94% of their competitors can do exactly what they do, perhaps at a lower price. So they were really trying to find ways to differentiate themselves, and you might have an organization that's like that. It's really challenging to differentiate, and you want to find more and better reasons to do that. And so with this particular company, what we began to do is ask ourselves two questions. So the first question was, what is it we know about our customers today that they don't? And based on their current and future goals, how might that information bring greater benefit? How might it reduce risk or create opportunity that this customer might need or want today, or perhaps even tomorrow, but predominantly today, specifically today. And these questions shifted everything, and it might shift everything for you as well. This manufacturing company had struck partnerships in key geographical areas that would, one, allow the customer to keep the same price in the same market, which they struggled to do, Number 2, deliver within 5 days, and they'd struggled to do that geographically, the customers that they're working with. And number 3, reduce shipping costs by 60%. These were specific things that they had noted because they recognized that the customer themselves were struggling to price themselves into marketplaces they wanted to go in because the shipping costs were higher because it's taking them longer to get the product to the customer. They were losing competitive advantage. They had these reshipment orders of this kind of, of products that they couldn't take back quick enough in order to resend back to the customer. And this was increasing their shipping costs significantly. So just knowing that and having known that they have key partnerships in these geographical areas It was huge, and once they presented it to the customer, literally within 4 months, they saved their customers about $75,000 in shipping and increased their revenue by about 26-28% in a single quarter. Result: they got every single international order from these customers, significantly growing their business, literally doubling it within a few months. That's the power of value creation when you're willing to sit and identify those particular things that you know about the customer that they don't and turn that into a specific solution or advantage. Then we have this second function called Systematic Value, and Systematic Value are those benefits of customer experiences consistently and predictably at a different, the different stages in the relationship. And the, the one pillar that forms this pillar number 3 is value realization, and it's the effective use and management of the resources that you have to enable the full value of your services and products to be delivered. So it's the effective use and management of those resources. So there's a really interesting way in which we can think about this because value realization is really a new concept being used cross-industry. It was typically only used within the technology space because customers were making very large purchases and they were looking for that return on investment, that's physical, practical, tangible returns on investment on these enablement transformation projects that they were doing. So value realization was a framework that came in once these purchases, this particular way of buying technology, had begun. So I'll give you an example of a financial services company working with them. They wanted to decrease the wait time for their customers by improving the ease and usability of its new digital service desk. So essentially, these financial services companies, they're wanting to make some really specific improvements. So reduce cost of service, increase user satisfaction, increase transaction revenue. So before this took place, they were serving, say an example, 50 customers per hour. And it's costing them about £90 per person, or $90 per person for those outside, and only 60 transactions in that space, transactions per hour. And then what they wanted to do was obviously to improve that. So once this transformation took place and they delivered this and were tracking it, the result was post the new service desk and getting this new digital service desk set up right across and transforming the way they think about this. They were now serving 80 customers per hour at a cost of £40 per person, $40 per person, with a 40% increase in self-service and now 90 transactions happening per hour. So you can see in that particular example, value realization has met all 3 criteria. So what you want to have as an organization is throughout the life cycle of your relationships with your customers, What are they predictably seeing from you over time that you have promised based on your relationship? So let's just think about the relationship as something that isn't just tied to a particular project, it's tied to your actual relationship. What is the reputation that you have with that customer? What are you actually being asked to deliver? So we need to get specific on really a few things. So the first is What are they actually buying from us? The second is, what are we actually promising? And the third is, what is the expectation over time? What is the expectation over time that they have? And then really specifically writing that out, documenting it, and ensuring that your business is geared up to begin to produce that. Now, obviously, I've actually written a really detailed piece on this inside my blog. I'll probably be doing a really separate piece just on value realization all by itself because It's so, so important and perhaps one of the most important pillars in this value pillars area because it defines how the entire organization relates to producing this repeatedly and predictably. The next area and the last area is enhanced value. So these are areas within the product or service that can be made more attractive to a customer to help make an existing product more profitable or create new future solutions for a customer. And so the last pillar for this is called Value Elements, and it's really the inclusion of really specific psychological, emotional, practical, and philosophical distinctions that greatly improves the perceived benefit of a specific— specified— can I say it? Specific product or service. So let's tap into this because there's some really interesting research right across the board on this, and I was going to pick one piece of research that I think is most helpful for this particular context. So Bain Company did some research, and they had researched about 10,000 consumers in the US on 50 different US brands, which the majority of them were global, and uncovered what they called the value pyramid. Now, it consisted of 30 different elements of value that was split into 4 categories. And they mapped this against the work of the psychologist Maslow on the work of the hierarchy of needs, of human needs. And the 4 elements were characterized in 4 different areas. So functional value, emotional value, life-changing value, and social impact. And so what they recognized with these specific elements are some elements noted within the categories were more inwardly focused, primarily addressing a consumer's personal needs. For example, um, a company called Fitbit, which you might know, they have what they would call a life-changing element, and motivation is at the core of their product. So this whole idea of life-changing, that cat— that category, and the element is motivation. So their motivation is the value. This— they see the actual value of the motivation behind the actual product. And then we have the outward-focused, which helps customers interact or navigate the external world. And those are things like the functional things, such as a functional element might be organizers, helps to organize something specific. So you might have a Container Store or Intuit's TurboTax because It helps consumers deal with complexity in the world, helps to organize something. So that functional category and the element organize then becomes a much higher value when positioned and communicated well to the customer. So here's what Bain Company noticed. Those organizations that scored 8 or above in these defined elements saw 3 times the revenue in the marketplace, meaning they were top leaders in their marketplace, and 4 times the number of balanced satisfaction. Their NPS scores were 4 times higher than their next closest competitor. These were significant. We're talking about companies like Apple, TOMS, Amazon, Samsung, and more, even smaller insurance companies, which I'll come to an example with. So there are case studies, these case studies are wide and varied, and you can find them mostly reading HBR's work or Harvard Business Review's work on covering the Bain and Company research. But essentially there's actually a really interesting example here. So an insurance company had noted that they, they wanted to increase the perceived value of the products that they had, and so they ended up adding a low-fee automated advice platform to its core investment services. And it did this in order to keep its clients better informed, but also to reduce the risk of churn. And simply by adding in a low-fee automated advice platform, which essentially tapped into this whole idea of the emotional elements and attractiveness, reducing anxiety, they were able to keep not just 20% more of their customers as an insurance company, but close to 40% more of their customers simply by adding this in to keep their clients better informed and to make that easy for them to access. Something as simple as that had a significant difference to their business. So each of these 4 pillars by themselves can yield game-changing results when applied to your department, to your organization, to your team, to the way you deliver to your customers. And if combined, you will be on your way to being the number one choice in every category you want for your most important customers. So Pillar Number 1: Adding Value. Pillar Number 2: Value Creation. Pillar Number 3: Value Realization. Pillar Number 4: Value Elements. And I have a blog that you can look into and go into much more detail on some of these areas. I'll put those in the show notes. But here's one action you can take. So decide to have weekly value evaluations. Have these conversations with your business, your team, your colleagues, peers, dare I say monthly, or where appropriate, with your customers. You have it as frequently as you possibly can to see where you can begin to increase the likelihood of you having this unrivaled approach, this irreplaceability in your customer relationships. So focus on pillar number 1 to start with. What impact is the value you say you have actually having, and how can this be improved? So what is— what impact is the value you say you have, what is it actually having, and how can this be improved? Just start there to begin with. If you want to go deeper, you can check out the blog or subscribe to jermaineedwards.com. To get more of these details. So thank you very much. I hope that's been helpful to you, and I've gone through a lot of content there, so the blog might just lay it out a little bit more, and I'll come back in Episode 9 to just break down some of these areas, give you some more stories and more examples to move your relationships forward. I want you to become the kind of advisor your customer never wants to leave. This is one really core component to doing that. I'll see you soon.

Hey, thanks for listening to to the Key Customer Growth Podcast. Hope you enjoyed the episode and got some great value. If that has been your story today, please share, comment, and subscribe so we can reach more people with the message and impact them also. Most importantly, I want to hear your feedback on what you liked or what you would like to hear and see in the future. Look forward to hearing from you, and you can find all the show notes below. Wishing you success in becoming an irreplaceable advisor.