Customer Value Levels
In a number of recent posts (see Customer Value Factors, Customer Value Drivers and The Organizational Dialogue), we have been looking at creation of customer value from an organizational point of view. Now it is about time to also gather some thoughts on the customer perspective to desirable services! Especially, what are the levels of value perception by customers themselves?
The Value Pyramid
Customer value perception of a service is both utilitarian and based on emotion. Depicting this as hierarchical levels within a pyramid, following the example of Maslow's hierarchy of needs, seems to be possible. The following categorization is not a research-based outcome, just a personal recapitulation of experiences in development of digital services, which is different than for physical products.
DUH!
The basic level of customer value and a guiding star for many, is certainly price. The customer reasons that “this is likely not better or worse than anything else, so I may as well take this deal, but only until something better priced turns up.” In commodity business around physical goods, economies of scale are crucial for keeping prices low. In non-digital services business there are yet other aspects. Digital services often have freemium aspects, which make this level less relevant (DUH!) - the free options make customers seek differentiating value elsewhere.
WOW!
This next level moves away from the purely utilitarian and puts more emphasis on emotion. The customer thinks that “this is unusually well done, but that’s what I expect to even bother with it." A differentiating factor can still be what brings WOW! Nevertheless, there is only so much to be achieved from nicely implemented user interface design, graphics and transitions, if everyday use value is missing from a service. Great aesthetics is basic hygiene, meaning that user experience designers must help business owners on a much deeper level.
AHA!
When the customer realizes that “this will change the way I’m doing things”, then a service has reached the upper level of the customer value pyramid. The roots of AHA come from customer insight and experimentation. AHA forgives some lack in the value levels of DUH (price) and WOW (design), but often build upon advances in them, e.g. affordable technical performance. Something that customers are sure to notice, is the quality of support they get after purchasing a service. The AHA value level of support can even be a transformation journey.
The Active Customer
Customers experience their own kind of journeys when being close to a service, by first discovering, then acquiring, taking into use, continuing use, and perhaps eventually stop using the service. At any point, these users of a service may share their opinion of it. Customers being satisfied may become promoters. Desirable services are likely to get active users, which create revenue and even promotion, thus boosting incentive for business owners to improve services even further.
About Finding AHAs
I have encountered different schools of thought regarding how much one should listen to customers. Famous quotes by Henry Ford ("If I had asked people what they wanted, they would have said faster horses.") and Steve Jobs ("A lot of times, people don’t know what they want until you show it to them") indicate one way of thinking, which certainly might work out every now and then, when dealing with groundbreaking innovations proposed at the right time and place. Technology-driven innovations may not be comprehensible before seeing them.
Most innovations nevertheless happen from new perspectives or combinations of existing technology or services. Sometimes an AHA is something very simple. Designers and developers usually are generalists, who are trained to take on any new creative challenge. Listening to customers is not about being told what to do, but about using empathy for quickly gaining understanding and inspiration, in order to help customers in removing frustrations or achieving desires, which they might not even be able to articulate. AHAs are found "between the lines".
Update 19 March 2016: Some additional thoughts on ways of finding AHAs.
You may also be interested in my previous posting:
