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Do Your Customers See Your Value?
If customers fail to see value, they regard your products or services as commodities.
For the rest of the January 2005 issue of CRM magazine please click here
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Strativity Group's recent Global Customer Experience Management Study revealed to us that 50 percent of sales professionals cannot justify the prices of their firm's products and services. Instead, salespeople often blame their discounting on the customers' demand for lower price. But why are customers asking for lower price? The easy answer is, because they can. The real answer requires a deeper look at the value organizations deliver.
Many businesses and customers fail to fully appreciate the value of what they purchase, and as such they ask for a discount. They do not see the clear correlation between the value delivered and the price they are being charged. This is the essence of commodities. If customers fail to see value, they regard your products or services as commodities, easily replaceable by other similar products. Commoditization was accelerated in the past few years as companies reduced their total value through cost-reduction efforts. Delivering more vanilla and uninspiring--a.k.a. boring--products and services, companies signaled that their products are not worth the money they ask for them. The problem is even more acute in certain industries where comparison is complicated (wireless phones) or the product is intangible (insurance or banking). In those cases the burden is on the vendors to create new tools and methods that will demonstrate to the customers the value provided. Organizations need to help customers visualize the value they deliver to customers, who will in turn appreciate the overall experience. This appreciation will translate to a reduced churn rate and premium prices, if the value visualization is correctly executed. Visualizing value is a serious challenge, especially in today's overcrowded marketing-communication world. Customers often cannot tell the difference between products, and companies do not demonstrate a clear enough differentiation to justify a premium price. Very few companies succeed in establishing their value in a visual way. As you plan this year's business activities to deliver a more complete and exciting experience to customers, remember this fundamental rule: If your customers cannot see the value, they will not appreciate it and will not pay full price for it. Creating value visualization tools requires a deeper understanding of the customers' total experience and the way customers view your products and services. The creative work of designing ways to send a visual image to customers to help them appreciate and differentiate your products then starts.
Verizon's famous "Can you hear me now" ad campaign helped the company to defend its retention rate and increase the customer base, while keeping its prices fairly stable in a tough competitive environment. Verizon succeeded in achieving those results by creating a way for customers to visualize Verizon's quality assurance. By doing so Verizon shifted customers' considerations from pricing to quality. Regardless of how great the value you deliver is, if the customer does not see it, it is useless. As you design and improve your products, services, and experiences, you must consider value visualization. Customers need constant reminders of why they should stay in business with your company and pay fair prices for the value you deliver. It is your responsibility to deliver that experience, which is an integral part of the total value proposition. The sale is never over. Lior Arussy is president of Strativity Group and author of The Experience!, Innovating IT, and the upcoming Passionate & Profitable (Wiley, February 2005). He can be reached at Lior@strativitygroup.com
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To contact the editors, please email editor@destinationCRM.com
Every month, CRM magazine covers the customer relationship management industry and beyond. To subscribe, please visit http://www.destinationCRM.com/subscribe/.
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