"Price is what you pay. Value is what you get."

For a customer experience to be frictionless, it must be reliable, relevant, valuable and trustable. Reliability and relevance are basically just “product competence” and “customer competence.” Does the marketer have the competence to deliver a product that meets the customer’s need without problems (reliability)? And does the marketer have the competence to align its offering and communication with this particular customer’s own attributes or situation (relevance)?

But as Warren Buffett once said, “Price is what you pay. Value is what you get.” The price of a customer experience may be measured in dollars and cents, but its value is based on its context -- both to the customer and to the company.

For a customer experience to be valuable, it must be perceived as a fair trade for the customer. That is, the price the customer pays must be no more than the value the customer expects to receive. And of course every customer has his or her own opinion as to the value of whatever product or service you’re selling, which is related to its reliability and relevance. An unreliable or irrelevant customer experience will have that much less value to the customer.

Ironically, however, when a business increases its focus on improving the value of the customer experience it delivers, it can often reduce its own costs, as well. Because eliminating friction will not just raise the value of an experience to the customer, it will also reduce the company's cost of delivering that experience.

In a previous post, I mentioned how these cost reductions can often help a company justify and pay for improving the quality of customer experience it delivers. And this is exactly what happened when one of our clients, a $20 billion company in the telecom business, began focusing on how to eliminate friction. Over a three-year period the company was able to document nearly $2 billion in unnecessary process costs, which generated an estimated $3 billion in added revenue. So the friction-eliminating initiative clearly paid for itself.

At the same time, however, this company also saw a significant increase in its average level of customer satisfaction, so the initiative also increased the value of the customer experience.

In physics, friction is the heat waste that impedes any closed system, and the measure of friction is entropy, or randomness. You could think of friction as the opposite of order. As friction increases, order declines.

When you're delivering a customer experience, friction is the extra effort that impedes your customer from meeting his or her need efficiently. You could think of this kind of friction as economic waste. And as friction increases, value declines.