How to Discover Customer Value? Ideas Simplified - Part 1

This is part of a series of articles that I wish to share on customer value discovery by introducing concepts such as the customer-action cycle, value nodes, and value catalysts. The ideas have been split into parts that are interconnected and aligned to the model being shared. Although the idea of creating value is many decades old, it can be confusing because of the lack of an approach that allows one to connect the dots. The objective is to simplify the understanding of value and its creation and provide a structured approach to discovering value.

Customer-Action Cycle (CAC)

Let us begin by studying the constituents of an action.

The above figure shows a man with a camera. At family functions, this person uses his camera to click photographs and frame them. This creates a lot of goodwill amongst his relatives. This action can be broken down into its components such as the context(family functions), customer(photographer), tool used(camera), action taken (taking photographs), outcome (framed photograph) and consequence (goodwill created). And yes, the camera was sold by a supplier! These components are present in every action executed by any customer. Value gets created somewhere along the CAC and these series of articles will help dissect value creation and map it to the CAC and its various components.

Role of Needs and Values

People often get confused between these two ideas. A marketer is constantly looking at meeting the unmet needs and creating value for the customer. The needs-based motivational theory was propounded by Henry Murray in the 1930s to explain causes of any action and it is believed that every human being, from the time he/she is born, attempts to fulfil these core needs. In other words, these Needs (eg. freedom, honesty, appreciation, fun, respect, love, etc.) are valuable to humans and help us survive and adapt to the environment. However, since all of us have our own perceptions of what a Need can mean, the value that we attach to these Needs is subjective and hence we often refer to value as "perceived value". Since perceptions are relative, the concept of value is tied to the idea of comparison between options and selecting the option that best suits the customer needs.

One of the causes of action are Needs and every action meets a Need. Customer value gets created by attaching meaning and importance to needs, actions, tools, outcomes, consequences and relationships (supplier and customer experiences). Since meaning and importance (priority) can be changed, marketers are constantly looking at creating value. Values change, Needs don't. To understand customer value, it is important to look at the various components of the customer-action cycle. The value discovery model based on the study of the CAC is shown below and I will refer to it as the CAC Model for the sake of convenience.

There are seven major entities in the customer-action model that are represented by nouns and the relationship between these entities are represented by verbs. The sum of all these relationships constitute the overall customer experience. These entities are called value nodes and a marketer can discover and capture value by studying these value nodes. It may be noted that the supplier value node is outside the customer-action cycle but contributes to customer value. Apart from the value nodes, there are other factors that can influence the customer decision and action. I refer to them as value catalysts because their presence assists the decision making process apart from providing the required impetus to take action. A study of value catalysts can provide insights into how value can be created for the customer. The value catalysts identified are motivation, beliefs, skills, resources, expectations, and emotions. Any of these catalysts can accelerate the customer decision making process.

Changes made to a value node or a value catalyst impacts every other component in the customer-action cycle. I will make an attempt to expand each of these ideas in my subsequent posts.

Part 2 will explain the important role of contexts in creating customer value.

Note: The article contents are personal views of the author. Any comments are most welcome.