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Monday, July 4, 2016

Value: A trickier concept than it seems...

I really enjoyed Ellen Gottesdiener's recent post on value. Although we throw that term around a lot in the product management community, it remains a bit of a tricky concept for many. The key problem is that the value we perceive is often different that the value our customers' realize. Here are a few examples I refer to in my product management classes. I'm not sure about the veracity of the Concorde example, but I find it illustrative regardless.

Examples:

  • A survey revealed that people wanted to buy milkshakes in the morning instead of breakfast items because they last longer, keeping them occupied during their commute. [value beyond taste]
  • A survey of Concorde passengers revealed that they thought their tickets were much more expensive than they actually were. Response? Raise prices! [greater perception of value than airline assumed]
  • Have you ever realized that the time it takes for the waiter to deliver your meal doesn't necessarily go up if the delay goes down? How does it make you feel to have a meal delivered to you just minutes after you order it (we're talking sit-down situation or room service here)? [Some KPIs generate negative value beyond a certain point]
  • Many customers value a relationship with a big vendor over superior features and functions from smaller vendors. Frustrating for the "little guy", but true in my experience. [features/functions not as important as security]

Have you thought about what customers really value in your products (or how much they value it)? It may not be what you're thinking.

The trick to discovering customer value is actually talking to customers about value beyond what you typically perceive as valuable. It helps us develop empathy, something for which there is no true substitute. We have a tendency to talk about features and functions (which makes sense), to the detriment of deeper understanding of their problems and perceptions. Although customers use our products' features, they base their perceptions on a broader "customer experience". Are you on top of it?

In a previous post, I suggested a few creative questions you can ask your customers to better educate yourself. Doing a little reading on customer experience is also a good idea.

What are your experiences with customer value? What were your biggest surprises?

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