Know what your customers value

I have just been reading “Blue Ocean Strategy” by W. Chan Kim and Renee Mauborgne.

Blue Ocean Strategy examines how businesses establish new products and services in ‘blue oceans’, markets in which they have no competition.

They see innovation as the key driver for creating blue oceans (uncontested markets). Most people consider innovation in terms of technical product innovation and whilst there are some excellent examples of technical product innovation like the Apple ipod, the are many failures. They also examined businesses where technical innovation was not involved. They see the key as value innovation. We are talking about value not price. Value is what customers value in your products and services.

Remember people buy on value not price.

Blue Ocean Strategy uses a method they call the strategy canvas where values are ranked as to importance. Your competitors are also mapped. Often the ranking of values between you and your competitors is often the same, therefore you are competing on the same values, making it harder to differentiate yourself.

When you map the values of your product or service and their relative importance, you overlay your values. It is important that you get away from what you think and understand what your customer thinks. You need to get into the mind of your customer.

What is the best way of getting into the mind of your customer. Just ask them. What is the most important thing about our product to you? or What is the most important thing that we can do for you?

Makes notes of what they say. You may find that your customers value something that you had not even thought of or placed low importance upon. You then need to change your marketing, sales and your products to match those values that your customers place importance upon.

We recently met a large new client in respect of our forensic accounting services. We asked them what was the most important aspect of our work for them. The answer was understanding and unraveling complex financial structures. This was a revelation to us because we had forgotten its importance to our clients. We have moved that value much higher up our list.

So what is important:

  • Know your customers, find out how they think.
  • Don’t assume that what you value will be what they value.