Strategico’s Strata of Customer Value©
The customer should be the focal point of all Business-to-Business organizations. Organizations forget who ultimately pays the bill that keeps them profitable and in business. In a perfectly competitive world, customers always assess the value offered by all suppliers, and remain loyal only because they cannot received similar value from any other supplier.
Organizations that do not select customers to serve are opportunistic, however, they may fail to deliver sufficient value to all their customers, putting their long-term sustainability at risk
Fortunately, every customer has unsatisfied needs. The existence of these unsatisfied needs, drives our consumer-driven and capitalist society. Businesses are always seeking suppliers to satisfy their own needs, so that they can, in-turn, deliver additional value to their own customers. Needs can be related to their own organization, to their departments or can be personal in nature. If customer-focused organizations don’t care to ask about and understand their customer’s needs, customers will eventually seek satisfaction of their business needs from other suppliers.
The term “Business Pain” has a negative connotation, but it’s a necessary evil. The gap a customer perceives between their own needs (organizational, departmental or personal) and their current state, is the most powerful motivator driving them to purchase from existing or, if necessary, new suppliers. Thus business pain provides business-to-business organizations the catalyst to increase their business.
Unfortunately, value can only be defined by the customer, not by the functions and benefits of what’s offered. Therefore, organizations that believe they offer value, can be very disappointed, if not irritated, when their customer does not recognize, or is willing to pay for, the value they received.
Value can be described, or captured in a Value Proposition. This term is often used (126 million hits according to Google), but inconsistently defined and rarely tested. Only the customer can recognize value, so the only way to assess is by asking customers in a non-judgemental fashion.