Customer-Centric Marketing 101: It All Starts with Understanding What Customers Value

Just like knowing the lion’s habits to survive in the wild, businesses must understand what customers want to thrive. Recent research shows that 93% of customers are willing to spend more if a company offers their preferred customer service option. In today's competitive market, knowing exactly what customers value in a product or service is crucial. Customers, especially those whose expenses depend on their purchases, see buying as a way to boost profits and often pressure suppliers to lower prices. To convince customers to look beyond just the initial cost and consider the overall value, suppliers need to know precisely what their customers care about.

In this newsletter, we'll explore the importance of understanding customer preferences in three key sections:

The Essence of Value in Business Markets

Understanding customer value lies at the heart of successful business marketing. In a world where customers increasingly seek to maximise profits, suppliers must grasp the worth of their products and services to provide persuasive offerings. This section explores the crucial role of defining and measuring value in a business context.

Decoding Value

What does "value" mean in the business landscape? Can it be quantified? These fundamental questions often challenge suppliers. This subsection delves into the intricacies of value, emphasizing its role in influencing customer decisions and the need for suppliers to comprehend what customers truly value. Visualizing value is key. Take the example of a commercial grower facing two mulch film suppliers. We dissect the difference between a vague promise of cost reduction and a concrete proposition, highlighting the importance of tangible value in customer communication.

Crafting a Common Definition of Value

A shared understanding of value is paramount. This section navigates the terrain of value in business markets, introducing a comprehensive definition. We explore the monetary aspects, net benefits, and the contextual nature of value. A simple equation encapsulates the essence: (Values – Prices) > (Valuea – Pricea).

The Value Equation

Breaking down the value equation, we unveil the importance of customer incentives in purchasing decisions. We emphasize the role of suppliers in aligning their offerings with customer needs to create a superior value proposition.

Competitive Alternatives

Even in the absence of direct competitors, a competitive alternative always exists. We explore how understanding value within a competitive context shapes supplier strategies and influences customer choices.

Building Customer Value Models: A Concise Guide

Field Value Assessments serve as a prevalent and accurate method for constructing customer value models. This approach involves gathering firsthand data from customers, although alternatives like surveys, conjoint analysis, and focus groups can be utilized when direct research is challenging.?

Get started

To initiate the process, assembling a diverse value research team is crucial. The team should include individuals with product, field engineering, and marketing experience, along with forward-thinking salespeople. Selecting the right market segment is the next step, preferably with close and collaborative relationships. Incentives for customer cooperation, such as shared research findings, should be carefully planned before approaching customers.

Generate a comprehensive list of value elements

Generating a comprehensive list of value elements is essential. These elements encompass technical, economic, service, and social factors that influence the costs and benefits of the offering in the customer’s business. It’s crucial to be inclusive and consider the entire life cycle of the product or service.

Gather data

Gathering data involves obtaining initial estimates for each value element. Creative methods like placing team members in key functional areas of the customer’s organization can provide valuable insights. Focus groups and external consultants can also contribute to data discovery. Making explicit assumptions during the analysis is critical to maintaining credibility and encouraging customer collaboration.

Validate the model

Validating the model requires conducting additional assessments with diverse customers. This helps refine value estimates, understand variance, and use comparative judgments for better accuracy. Creating persuasive sales tools, such as value case histories, can enhance informed decision-making.

Create value-based sales tools

Putting the understanding of value into use involves managing market offerings with flexible, value-driven solutions. This includes identifying and eliminating value drains, services that cost more to provide than they are worth to customers. Value models guide the development of new or improved products and services, providing insights into what customers are willing to pay for.

Sustaining customer relationships

Gaining customers relies on crafting persuasive value propositions based on a deep understanding of how market offerings deliver value. This is exemplified by companies like Greif Brothers Corporation, which markets complete packaging systems and uses value models to understand total costs.

Sustaining customer relationships involves periodic evidence of trust and commitment. Suppliers can provide documented savings and achievements to customers, fostering long-term relationships. Value-added services, demonstrated through periodic reviews, contribute to customer loyalty and satisfaction.

Conclusion:

In the world of customer-centric marketing, it boils down to this: success comes from really knowing what customers want. We've talked about figuring out these preferences, creating plans that show why our products or services matter, and building relationships based on trust. Looking ahead, let's remember that it's not just about selling stuff—it's about understanding what really counts for our customers.