Measuring customer value – might be easier than you think

How do we know if we are producing value for our customers and why is this important? From a customer experience perspective one way to create valuable outcomes for the business is to motivate customers to behaviors that unlock these outcomes. And one way to motivate customers is by finding what their needs are and offering them something of value that influence behaviors that drive them towards these needs. In other words: offering value to the customer that unlocks value for the business.

So, how do we measure our ability to do and improve this? It might be easier than you think..

In his 2020 article “The most important Metrics you are not tracking (yet)”Gene Cornfield, suggests to use Customer Performance Indicators (CPIs). These are compared to KPIs measures on our ability to produce value for the customer, compared to KPIs which measure our ability to get the customers to produce value for us.

But, how do you find the right CPIs?

There might be two approaches (there are most likely many):

1. Is our engagement producing value?

Using Outcome Driven Innovation (ODI) by Strategyn can help break down the customers’ jobs (what they are trying to do) into smaller desirable outcomes, finding which of these are aligned to your business and also could be set up as a quantitative real-time measures (e.g. in Cornfield’s article he references an insurance company using reduction in ‘time-through-sales-funnel’ as a quantitative measure for customer value which their qualitative research confirmed).

Measuring customer value down to the engagement level can give your team a direct line-of-sight between what they are doing and the customers. It also helps us make sure we can improve whats important to our customer in our engagements.

2. Are we helping the customer’s own progress?

According to jobs-to-be-done theory every customer hires products or services from because they have a need for progress to solve. Customers aren’t buying products just because someone is selling them. There is almost always an underlying unsatisfied need that the company is consciously or unconsciously tapping into. The question is: how good are your products or services at helping the customers do their job and and how can you improve?

Jobs-to-be-done helps organizations take a step back from it’s technology and functionality and look at their ability to produce progress for the customer from a broader perspective — it’s agnostic to what vehicle you are using to enable the customer to produce value. With technologies and customer demands changing every so often it can be important for the company to measure itself against something more stable and long term: the customers’ needs .. and have a measure that even incentives pivots if needed.

These are just two examples, of course. But hopefully it can be inspiring to find your own.

Sources:

https://hbr.org/2020/04/the-most-important-metrics-youre-not-tracking-yet
https://hbr.org/2008/05/the-customer-centered-innovation-map
https://sloanreview.mit.edu/article/finding-the-right-job-for-your-product/
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