Developing customer value

Customer value  is the perception of what a product or service is worth to that  customer. Value can be driven by the direct utility of a product or service, such as the ability to travel between two points in London on the Tube. It can also be more complex such as in the purchase of piece of designer clothing which brings both direct utility and the additional feelings of association with a brand and its connected lifestyle. 

Customer value needs to also consider practical alternatives which do not need to be directly linked. The value of a Tube ride may seem lower when compared to a walk with an ice cream on a sunny day. 

So why does any of this affect the quality professional? Surely it is for our colleagues in sales and marketing to create, communicate and deliver these high value offerings for existing and potential customers. While of course they make a vital contribution, that does not leave quality without a role to play too.

In the pursuit of customer value, it may be highly appropriate for a quality professional to contribute competences around the process approach.

The CQI is clear that quality is about making organisations perform for their stakeholders and further states that for most organisations, customers will be the most important of those stakeholders. 

Most management system frameworks, including ISO 9001:2015 – Quality management systems, place the consideration of stakeholders or interested parties as a cornerstone of quality management system design and deployment. 

Identification of those stakeholders is quickly followed by an analysis of their specific requirements where it is easy to focus on hygiene factors such as safety, timeliness and compliance with regulations and legislation. These typically though only form the basis of value for those products and services which may be considered as commodities. 

In most circumstances, customer value arises from a far richer set of attributes and provides an opportunity for the quality professional to make an additional contribution to business success. 

A personal reflection is that it is far more typical to find a quality professional working with colleagues in the main line functions such as procurement, goods, receiving, manufacturing, testing and despatch, than in supporting functions such as HR, marketing, and finance. Reasons contributing to this are probably many and varied, and will most likely be driven by the lack of support. 

In the pursuit of customer value, it may be highly appropriate for a quality professional to contribute competences around the process approach and evidence-based decision-making to those in marketing, product development and sales, thereby contributing ‘diversity of thought’ to increase team effectiveness. (For balance, I am not suggesting that those skills would be absent but for our contribution. I would like to think though that our practised contribution would help.) 

So, how might we know if our contribution is having the desired effect? One might argue that a simple measure of sales activity can be a direct measure of customer value and I would certainly not want to argue that such an outcome is a bad thing. That said, ‘sales’ as a KPI can be very problematic. Sales can be accrued for many, less positive reasons. For example, we might be cheap as a supplier, changing sources may be time-consuming, or customers may be locked into an existing contract. It could be that a short term, uptick in purchases linked to an urgent customer need may be masking their concurrent works to leave us for a new procurement partner! 

Well designed, deployed and delivered methods to secure customer feedback can be a useful tool for the quality professional. Net Promoter System (NPS) approaches, for example, seek to explore the underlying drivers of customer loyalty. (A customer is loyal when they believe their relationship with you to be in their continued best interest.) An interesting first question may be an appropriate variation of: “On a scale of 0-10, how much value do we add to the success of your organisation?” 

One of my favourite days in the quality diary is that scheduled for management review. Imagine how much harder the senior leadership team would fight for tickets if we could hand them the secrets of adding and leveraging customer value.