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Casual Articles - The Importance of Focus for Generating Customer Value
Should we believe the experts in business? In 1876, Alexander Graham Bell offered his telephone patent to Western Union, the largest telegraph company in America, for $100,000. A committee of experts was convened to decide on the company’s interest in the new technology. The decision was clear.“Bell’s profession is that of a voice teacher … yet he claims to have discovered an instrument of great practical value in communication, which has been overlooked by thousands of workers who have spent years in this field. Any telegraph engineer will at once see the fallacy of this plan. The public simply cannot be trusted to handle technical communications equipment … When making a call, the subscriber must give the number verbally to the operator who will have to deal with the persons who may be illiterate, speak with lisps or stammer, or have foreign accents or who may be sleepy or intoxicated when making a call … In conclusion, the committee feels that it must advise against any investment whatever in Bell’s scheme.” (Martin 1977, p 11) What was the cause of the blindness exhibited by the Western Union committee? Another common cause of expert misjudgment is the “numeration bias.” Experts, like all humans, tend to assign a value to an idea by the number of people who support it. On the one hand, Western Union had all the “thousand of workers who spend years in the field” and on the other, the lone Alexander Graham Bell, who wasn’t even an engineer, but a voice teacher. Who would you believe? Could you blame Western Union for dismissing the value of Bell’s patent? The implications of Western Union’s misguided intuition were profound. In 1877, when three thousand telephones were already in service, Western Union realized that they made a tremendous mistake, and in December of 1877, they set up the American Speaking Telephone Company, in clear violation of Bell’s patents. In September 1878, the Bell Telephone Company, which was founded in 1877 and owned Bell’s patents, filed suit against Western Union, and although the Bell Company was still a small fledgling company, while Western Union was a giant, it won the law suit and forced Western Union out of the telephone business.How is this example related to qualitative research? When analyzing qualitative data, analysts prone to the numeration bias tend to assign a value to an idea by the number of times it i
Measuring customer profitability is vitally important to target the right prospects. Companies want to spend their marketing resources where this will generate the highest payoff. This requires insight in cross- and up-sell potential. It is not just current profitability, but
In its annual report on the biggest billionaires of our time, the authoritative Forbes magazine once again named Bill Gates as the richest man in the world with a net worth of $50 billion. This is the twelfth straight year that Gates has been accorded this honor. It may be true that Gates is less active in Microsoft these days, but the founding father of this mammoth corporation is still very much the king of the hill as far as material wealth is concerned. He is still the favorite role model of those who aspire for billion-dollar wealth.Forbes reports that, these days, becoming a billionaire is not as hard as it used to be. The publication said there are now a record 793 billionaires in the world, with an average net worth of $3.3 billion, compared to only 691 billionaires in 2005. If you pool all their resources together, these 793 billionaire men and women will have a net worth of $2.6 trillion.Contrast this figure to Forbes’ report from just three years ago that identified only 476 around the world. Comparing figures reveals that the number of billionaires worldwide has almost doubled over the past three years. And to think that just 20 years ago when Forbes was first published, there were only a total of 140 men and women on the magazine’s inaugural list of billionaires. These figures indicate that it is much easier to reach the billion-dollar plateau in the new millennium compared to 20 years ago.There are now new and unique ways to become a billionaire. One prime example is the new billionaire Calvin Ayre, the jet-setting Canadian playboy who started the sports-betting site bodog.com. Ayre made his fortune 10 years ago in Costar Rica by taking illegal gambling bets over the Internet. Ayre set up Bodog.com in 1995 mainly for sports gambling but he subsequently added casino horse-racing and poker. Bodog.com is now America's largest sports betting destination now valued at over $1 billion.Another notable new billionaire is Anurag Dikshit, one of the creators of the website ParyGaming poker. Dikshit hit the billion dollar mark when he and his partners publicly listed their website this year.
It is essential to carefully choose your Customer Value Proposition. Both value creation from the customer as well as the corporate viewpoint gain from consistent and deliberate focus on key market segments and core competences. This results in a mutual exchange of value, which will stabilize and strengthen your competitive position.
Introduction
The term customer value is typically used in one of two ways. Either customer value is used to describe the benefit a customer gets from using a product, or, customer value is the profit a customer generates for the company. In this paper we embrace both the "soft" (satisfaction) and "hard" (profitability) approach to value creation.
It is somewhat of a paradox to consider the value for the customer as if this were in some way opposed to the value for the company. There really should not appear to be a conflict of interest between value for versus from the customer, since this is not a zero sum game. For example, a customer that is getting excellent service is therefore less likely to shop around, compare prices, and maybe churn. Great service and satisfied customers are necessary to avoid your product being perceived as "merely" a commodity. How else can you command a premium price?
There is no reason to suggest that value created for the customer is in any way antipodal to value generated from the customer. The trick lies in matching the offer to the customer needs, or, finding the "right" customer given a company's offering[1]. To achieve this goal, it is essential that a purposely chosen Customer Value Proposition (CVP) be pursued.
Measuring Customer Value
There are many possible criteria to measure corporate performance like market share, turnover, profit, number of products sold, etcetera. Aggregate turnover, sales volume or market share do not necessarily provide a reliable picture of the (financial) performance of a company. For example, a large market share could have been acquired at too high cost, and as a result the profit per customer may be dangerously low.
Rather than only rely on aggregate performance figures, it is better to also capture characteristics at the individual customer level. The question then is: what are the most useful performance criteria to determine how a company is doing? Such performance criteria should ideally also provide guidance on how to change course "in mid-air", to offer help with tactical decision making. In general, aggregate numbers are not very useful to help everyday decision making at the operational level.
Not all customers are created equal, some are more profitable than others. For this reason, you want some kind of measure for profitability. Often, the hardest part in determining individual customer profitability is dealing with the fixed costs. You need to set up an allocation scheme that takes into account how fixed costs should be allocated across customers. This is not easy, but necessary to establish an individual profitability calculation. As an example, suppose hardware is needed to host a new VR system. If only 10% of customers have started using this system in the first year, it seems hardly reasonable to "charge" these customers with the full hardware costs. Then users of essentially a more efficient system would all "become" terribly unprofitable!
Measuring customer profitability is vitally important to target the right prospects. Companies want to spend their marketing resources where this will generate the highest payoff. This requires insight in cross- and up-sell potential. It is not just current profitability, but
Trade show rollup displays are more often than not a variant of banner displays. Such kinds of rollup display banners have banner stands that can be rolled up. These banner stands are ideal for creating standing photo mural to place on the floor. This kind of rollup banner stand has special hardware that lets your graphic image be seen right from the floor till the top of the image.The best part about this kind of rollup banner stand is that from the front view of the stand all that a prospective customers can see is the image itself. This is due to the fact that all of the hardware is either concealed or else a tiny portion of it is at the bottom or the top of the stand. The rollup trade show display can also be attached alongside another rollup banner stand in order to create a much more lengthened image that can be as extended as ten feet or more.If you are looking for a trade show display that easy to transport then a rollup display is the best to opt for. Rollup displays are a good choice for a host of reasons. They are not only light but are also economical and hence good for your budget. Another kind of rollup banner stand is a retractable banner stand. These stands are slightly better as they are higher on the durability scale. The graphic images in this kind of unit are rolled in and out of a housing made of metal. This housing is usually at the bottom end of the display.In the case of such retractable banner stands, the lamination is present on both sides of the display. This aids to preserve and protect the image from any kind of damage.All in all when you consider a banner display the rollup banners are something that you might not want to give a miss.
There is no reason to suggest that value created for the customer is in any way antipodal to value generated from the customer. The trick lies in matching the offer to the customer needs, or, finding the "right" customer given a company's offering[1]. To achieve this goal, it is essential that a purposely chosen Customer Value Proposition (CVP) be pursued.
Measuring Customer Value
There are many possible criteria to measure corporate performance like market share, turnover, profit, number of products sold, etcetera. Aggregate turnover, sales volume or market share do not necessarily provide a reliable picture of the (financial) performance of a company. For example, a large market share could have been acquired at too high cost, and as a result the profit per customer may be dangerously low.
Rather than only rely on aggregate performance figures, it is better to also capture characteristics at the individual customer level. The question then is: what are the most useful performance criteria to determine how a company is doing? Such performance criteria should ideally also provide guidance on how to change course "in mid-air", to offer help with tactical decision making. In general, aggregate numbers are not very useful to help everyday decision making at the operational level.
Not all customers are created equal, some are more profitable than others. For this reason, you want some kind of measure for profitability. Often, the hardest part in determining individual customer profitability is dealing with the fixed costs. You need to set up an allocation scheme that takes into account how fixed costs should be allocated across customers. This is not easy, but necessary to establish an individual profitability calculation. As an example, suppose hardware is needed to host a new VR system. If only 10% of customers have started using this system in the first year, it seems hardly reasonable to "charge" these customers with the full hardware costs. Then users of essentially a more efficient system would all "become" terribly unprofitable!
Measuring customer profitability is vitally important to target the right prospects. Companies want to spend their marketing resources where this will generate the highest payoff. This requires insight in cross- and up-sell potential. It is not just current profitability, but
The days are long gone when managers felt free to sit on the phone for half an hour, providing an in-depth job reference for a former colleague or subordinate. These days, HR departments are cracking down on renegade reference-givers, restricting references to the basic facts of job title, start date and ending date.The good news is that managers are off the hook when it comes to providing job references for former subordinates or co-workers IF they (the managers) still work for the employer. But when a former workmate asks you to give a reference, and you don't feel all that comfortable, and you don't have the excuse "HR won't let me" because you no longer work for the same company, what do you do?Now, it goes without saying that we like to help our former colleagues as they seek new opportunities. There's nothing more fun than singing the praises of a former workmate and knowing that you're helping him or her get a great job. But what about the case when you don't feel so comfortable? Amazingly, people will ask you for references who really should know better. Perhaps you and this fellow never saw eye to eye, or perhaps you gave him a poor job review, or even fired him!Nonetheless, he gives your name as a reference, and the phone rings. How do you deal?Here's how. You say, "Ah, yes, I remember Neal. But I'm not a great reference, because I didn't supervise him closely" [or, if that's not true, "because although I remember him as a nice guy, I don't have a terrific recollection of his work"]. If you were caught unaware, poor Neal can't really be angry at you for begging off. It's much better than giving him a bad reference - I wouldn't do that, no matter how negatively you feel about Neal's work.Here's one other choice, but it only works for written references. (They're strictly tongue-in-cheek, of course.) "In my opinion, you will be lucky if you can get this employee to work for you." or "I can recommend this candidate with no qualifications whatsoever."Good luck!
Measuring Customer Value
There are many possible criteria to measure corporate performance like market share, turnover, profit, number of products sold, etcetera. Aggregate turnover, sales volume or market share do not necessarily provide a reliable picture of the (financial) performance of a company. For example, a large market share could have been acquired at too high cost, and as a result the profit per customer may be dangerously low.
Rather than only rely on aggregate performance figures, it is better to also capture characteristics at the individual customer level. The question then is: what are the most useful performance criteria to determine how a company is doing? Such performance criteria should ideally also provide guidance on how to change course "in mid-air", to offer help with tactical decision making. In general, aggregate numbers are not very useful to help everyday decision making at the operational level.
Not all customers are created equal, some are more profitable than others. For this reason, you want some kind of measure for profitability. Often, the hardest part in determining individual customer profitability is dealing with the fixed costs. You need to set up an allocation scheme that takes into account how fixed costs should be allocated across customers. This is not easy, but necessary to establish an individual profitability calculation. As an example, suppose hardware is needed to host a new VR system. If only 10% of customers have started using this system in the first year, it seems hardly reasonable to "charge" these customers with the full hardware costs. Then users of essentially a more efficient system would all "become" terribly unprofitable!
Measuring customer profitability is vitally important to target the right prospects. Companies want to spend their marketing resources where this will generate the highest payoff. This requires insight in cross- and up-sell potential. It is not just current profitability, but
Just about anyone can explain what they know, or demonstrate how to do a skill that they've learned. And both of these can be, at times, effective ways of teaching. But these are not the only ways to teach. And for many students, these are not the most effective ways to learn.Certified trainers know how to teach the same topic several different ways so that their point gets across to all of the students, not just a few. They know how to recognize when students are having trouble with the topic, and they know how to help the students that need extra help. They are also very good at designing group work and hands-on projects, as well as practical problem-solving situations. These are all very effective methods of teaching that are often ignored by trainers who have not attended a Train the Trainer training workshop.Other skills that certified trainers have which uncertified trainers usually don't:• scheduling breaks after appropriate learning “chunks” • getting diverse groups of students to work together cooperatively and productively • scheduling in time for getting off the topic a little, as often happens in a class • keeping the students on track, when necessary • ensuring that students treat each other with respect • ensuring that often ignored and overlooked students get equal learning opportunities
Not all customers are created equal, some are more profitable than others. For this reason, you want some kind of measure for profitability. Often, the hardest part in determining individual customer profitability is dealing with the fixed costs. You need to set up an allocation scheme that takes into account how fixed costs should be allocated across customers. This is not easy, but necessary to establish an individual profitability calculation. As an example, suppose hardware is needed to host a new VR system. If only 10% of customers have started using this system in the first year, it seems hardly reasonable to "charge" these customers with the full hardware costs. Then users of essentially a more efficient system would all "become" terribly unprofitable!
Measuring customer profitability is vitally important to target the right prospects. Companies want to spend their marketing resources where this will generate the highest payoff. This requires insight in cross- and up-sell potential. It is not just current profitability, but
One of the most important things in a business is a clean image. I started a small business when I was twelve years old and built it up in a very large small business and then franchised the business. I retired at age 40 after setting up franchises in 23 states and four countries. It is an automotive and cleaning franchise. We always believed in image and cleanliness. How can you sell cleaning services when your equipment is ratty looking, it shows a complete disrespect for the customer.Image and cleanliness were issues brought forth by some of the leaders of Franchising, such as Ray Kroc of McDonalds and Tom Monhan of Dominos Pizza. That tradition in franchising helps build brand loyalty and shows respect and pride in your work. When Fred Smith started Federal Express, now simply Fed Ex, re-named by the customers, he showed respect by insisting that all delivery vans be pressure washed nightly. If you look at the manual for a Starbucks, 1/2 of it is not how to make coffee, it is about customer service, cleanliness and image. Why? Respect for the customers, employees and Brand Name. Obviously many in business do not believe in image and few in Brand Name. You should in your business. So many of our competitors over the years did not, beating them in the market place was easy. Many times the independent mobile detailing outfits or mobile truck washing companies we competed against did not have a name on the vehicle or trailer the used in the business. Many had not even painted their rigs? Any color really. Heck, they could just paint it white with a blue stripe and put Plain Wrap-Pressure Washing. Anything is better than nothing, but image is important to your business too, any business really. Not only does it degrade the entire industry full of reputable practitioners but also it is degrading to the individual business and their customers when a practitioner fails to maintain a proper image.I was always and still am today obsessed with image and this obsession in business has served me well, you need to think about this and constantly audit your image from the customer’s perspective, look around stand out side your store and just stare, what do you see? Do the same for the competition, what are they lacking? Are you lacking the same, can you improve your image? Here is the first page of the first chapter of my company’s Confidential Operations Manual. The entire set of manuals at my Company is over 10
Measuring customer profitability is vitally important to target the right prospects. Companies want to spend their marketing resources where this will generate the highest payoff. This requires insight in cross- and up-sell potential. It is not just current profitability, but also the development of customer profitability over time that is important. Insight in both is necessary to evaluate the ROI of marketing spend.
A New Paradigm: From Aggregate to Individual Customer Data
Businesses are increasingly run "by the numbers". CRM, the new marketing paradigm, has helped to shift the focus from aggregate company sales to the individual customer. It is not enough anymore to know that your market share went up. The underlying "quality of growth" needs to be monitored as well. Numbers like the percentage of new customers and attrition of the existing base can have a huge impact on bottom line figures, and further potential for growth[2],[3]. According to many[4],[5], CRM has failed in many respects. Even if this were true, it has nonetheless brought about a lasting change in focus on the kinds of numbers that are used to steer businesses.
In this new marketing paradigm, the focus is now on customer lifecycle management, on developing and maintaining customer relations. Marketing spend is seen, not just as an expense, but rather as an investment in the relation with the customer.
Value From or For the Customer?
Sometimes the debate on value creation is treated as a zero sum game: by doing more for the customer the company is earning less. This is only an apparent paradox[6]. Sustainable value can only be created if the supplier can afford to offer the current service level and still maintain profitability.
From the customer perspective, they consistently need to get a better overall deal than they could get from the competition[7]. If dealing with the current supplier does not generate excess value, customers will leave. Value for the customer means more than just offering a better price. As an example: the Ritz-Carlton hotel chain is not cheap. But the service is excellent. As long as the "total experience" is better, the Ritz-Carlton still provides more value to those who can appreciate this superior service.
For the corporation, value creation comes in the form of a steady cash flow, which can be counted on to extend into the future as well. Value is created in marketplaces where both suppliers and customers are in a win-win relation. Only then will the supplier be able to sustain its market position, and only then will it be in the customer's best interest to maintain the relationship with this supplier.
Loyalty is not something that can be bought, at least not profitably for prolonged periods of time. In fact customers cannot even be owned. Customers can be rented from the marketplace. But this comes at a price, namely acquisition and retention costs. Loyalty is a privilege one can earn by consistently delivering superior value to the customer.
Dynamics of growth
Providing value to the customer leads to growth in the market. This in turn leads to a better understanding of the reasons beh
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