Tuning Up Your Value Proposition

Customer Value Creation - Good to Great Article

	Good to Great - Customer Value Creation By Tom Cissell Recently I have read two interesting books. The first, Good to Great (HarperCollins, 2001) by Jim Collins was referenced by a client of mine, and when a client references a book, I figure I ought to go read it. The second is The Tipping Point (Little, Brown and Company, 2000) by Malcom Gladwell. I was struck by a similar concept which was discussed in both. In Good to Great, Collins has documented how 11 companies went along with stock values that matched a similar comparison company for years and then suddenly took off to exceed by at least a factor of three the market's performance after a transition point – and sustained the performance for 15 years. The Tipping Point is all about the “epidemic” phenomena where an “idea, trend, or social behavior crosses a threshold and spreads like wildfire”.
	What struck me is that both books where documenting the point (referred to as “transition” in Good to Great and as “tipping” in Tipping Point) where things suddenly change dramatically. I, of course, immediately sought to relate this to customer value creation and wondered how many companies have experienced a breakaway point in their business due to their focus on creating value for their customers. I have seen companies improve their closure rates and margins as a result of implementing a customer value creation program in their sales operations. I have also observed companies that have realized significant results from a determined effort to establish the customer value of features and functions of an offering before developing the offering. Specific examples also come to mind of companies that focused on marketing the value they create for their customers with good results. While many companies have improved results by establishing customer value creation practices in part of their operations, very few of them have had sustained breakaway results. This leads me to offer the following hypothesis: In order for a company to have sustained breakaway results they must focus on customer value creation simultaneously in sales, marketing, and product management/development.
	Corollary: To keep pace with a rival that is breaking away from the pack, a company must focus on customer value creation simultaneously in sales, marketing, and product management/development. In my experience, companies implement customer value creation programs to solve specific problems in part of their operations. Most don’t see a formal customer value creation program as a fundamental corporate strategy, that to be most effective must be implemented in all three areas. Recently I was meeting with a sales person whom I trained on value selling about five years ago. We were reviewing a benefit map of one of their solutions which caused him to comment, “One of my biggest customers asked me ‘who are your product people talking to? It certainly isn’t us!’” Having a sales organization trained in value selling but receiving product offerings that are technology, not customer value driven, can lead to frustration. Similarly, having a solution designed around customer value that is marketed and/or sold based on bells and whistles, is never going to realize its maximum potential. Imagine you are pushing a wagon and two people are sitting in it. Perhaps you are strong enough to overcome the inertia to get it moving but it would be difficult to gain any momentum and more difficult still to sustain that momentum over a long distance. Now suppose one of riders gets out and helps you push. First of all, you benefit from less inertial now that their weight has been removed as part of the problem, and of course you also benefit from their added effort. If the third person also joins you in pushing, you are now in a position to get the wagon moving at a good clip and sustain that speed over a significant distance. Sales, marketing, or product management/development, may be able to get the customer value wagon moving on their own, but only when all three put their weight behind the wagon and push simultaneously, are they likely to achieve a sustained breakaway. For my part, I will continue to collect data to test the hypothesis. If anyone out there has thoughts or data to either support or negate it, I would appreciate hearing from you.