Wednesday, August 27, 2003

Businesses seem to forget about the concept of value.

It's not enough to be in business.

Rather you have to offer superb and compelling value. Some researchers suggest and experience also confirms that if you offer a compelling value, you will do better. Customers will buy more frequently. They will cost less to acquire. They will forgive you if you make a mistake. They will tell their friends.

Some studies suggest that being in the top 20% of companies offering superior value produces 25X better outcomes than being in the bottom 20%. So, simply put, it is the easiest way of being successful.

Let's put it another way. If you have a choice between projects and one has a return 25X greater than the other, why oh why would you pursue a me-too project offering me-too value propositions?

My personal belief is that creating value is about

1. Understanding what customers will pay for.
2. Looking at all aspects of what a customer is buying when the buy a product or service from you.
3. Listening very closely.
4. Understanding that different customers have different perceptions of value.
5. And organizing your business to "act on behalf of" the customer.

But there is a caveat. Not all customers are created equal. There are bad customers who will not fit with your value offering for whatever reason.

Deciding whom you will not service is as important as deciding who you will service. Actually, it may well be more important.

Alistair Davidson

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