A recent study by the Weatherhead School of Management at Case Western Reserve University confirmed what we already know in our heart of hearts—satisfaction has little to do with loyalty.
What was a surprise to them, however, was clear evidence that trust wasn't the deciding factor, either—at least not trust alone. What customers are looking for first and foremost is value—not the monetary kind of value, but value that impacts a person's life.
To determine the real, loyalty-building value of your products and services, you have to go beyond the features, functions and processes we are all so fond of and look instead at two critical factors: the value your offering brings to a customer's life, and how the experiences that surround and support your offering add to or detract from that value.
Most companies are used to thinking of their offerings in terms of features and benefits. An association might offer education (a feature) and members gain knowledge (a benefit). But value is something more.
Value represents not what a product or service does but how it impacts a person's life. For instance, a seminar that increases someone's professional skills might help him do a better job. This benefit of “doing a better job” can result in greater self-esteem, growth and perhaps even recognition or advancement. These results are the real value of the seminar.
Every benefit that a company provides should have identifiable value that enhances the personal or professional life of its customers. So how do we figure out exactly what that value is?
Psychologists tell us that human beings operate on four levels or dimensions: physical, emotional, intellectual and spiritual, making up what they call the Whole Person.
In the past, this theory helped people understand how to live a life in harmony, but we now find that it also applies to value as well and how consumers recognize and experience the value of what they purchase:
- The Physical Dimension governs basic survival needs such as food, shelter and our physical requirements as well as anything experienced through the senses. Values that we recognize on this level include comfort, pleasure and exhilaration.
- The Intellectual Dimension represents our analytical self, which processes objective value—the kind that is measurable and quantifiable, such as savings, interest rates and supply and demand. It's also where we appreciate excellence, performance and choice. Businesses focus here, because it's something they can wrap their arms around, but it's made us too price conscious and willing to believe value merely means low price.
- The Emotional Dimension is where we experience some of our most powerful and memorable consumer reactions. It's where we process subjective value—that intangible value that is highly personal. This is also where loyalty begins. Intellectually, you may know that you should keep doing business with a company that performs well—but the bond that cements loyalty is emotional.
- The Spiritual Dimension governs anything that touches our core being, like art, music, nature and creativity. The other dimensions are usually involved, too, which makes this dimension all the more potent. This is also the level where trust resides. Reaching into this dimension is what every company should strive for, because although trust isn't the only factor in creating loyalty, without it the staying power of loyalty is in question.
Everything that customers buy has some value that registers on at least one level or dimension. What's more, the more levels a product or service impacts, the more value it has.
The Pentium chip, for example, scores three hits on the intellectual level—performance, quality and a reputation for excellence. This makes it more valuable than a product that may have the same performance and quality but without the brand equity.
To help companies examine value on their own, we have developed the Value Model. It lists the primary qualities valued by consumers, grouped by the level on which they're recognized. While other attributes certainly exist and can be added as needed, this model gives us a place to start:
The Value Model
By charting products and services on the Value Model, you can identify both where they stand today and where you might be able to enhance value.
For example, if you currently offer convenience, you may be able to add choice. The model also helps you identify value groups, or collections of people who recognize and share values in the same way.
This exercise is especially valuable for companies that sell commoditized products or services. BP service stations sell the ultimate commodity, gasoline. Yet they've enhanced value by using solar panels to save energy and some pretty slick new pump stations with Internet connections that enable people to get weather reports and directions. Both offer a wealth of value.
Here's what these two BP features would look like on a Value Model chart:
|Energy-efficient solar panels||Spiritual||Social consciousness||"Green" shoppers|
|Directions / weather reports||Intellectual / emotional / physical||Efficiency, wellbeing, convenience||Pit stoppers and travelers|
Once you've identified the value of your product or service, you can use that insight to guide marketing, product development and, most importantly, the customer experience.
The Experience Factor
One of the misconceptions many businesses operate under is that once they've created valuable products or services, their job is done. The fact is, it's just begun.
If your primary value is convenience, then every experience your customers have with you should promote convenience. If wellbeing is your strength, then doing business with you should be as stress-free as possible.
A professional association that I belonged to had some great services in place, but the experience of accessing them was so frustrating that it detracted from their value. When operational issues were corrected and the experience improved, retention numbers went up 25% and non-dues revenue increased 50%.
You can make improvements, too, by looking at your company and all its offerings through your customer's eyes:
- Determine the value of each offering.
- Evaluate the way you communicate value—does it speak to the right dimension?
- Chart each experience and determine its impact on customers.
- Red-flag negative experiences, and do what you can to correct them.
- Identify the positive experiences and make them part of your value statements.
You can begin this process with one product or service and expand from there. What's important is to incorporate the ideals of value and experience into the culture of your organization.
History shows that any business that provides what the customer truly values can achieve real growth—not the growth that's eked out by downsizing and cost-cutting efficiencies, but the real thing. This growth, according to a Deloitte & Touche study, is double that of organizations that do not put the customer first.
It doesn't matter whether your company is large or small, product or service focused… if you're committed to delivering a value experience, you'll be rewarded with more loyal customers and a healthier bottom line—not just today but for many years to come.