Measuring Value on the right side of the fence (the customer’s side), objectively
When my friend Nikola Gaydarov posted the following:
‘The point of a digital transformation isn’t to become digital; it’s to generate value for the business.’
…many agreed and some questioned what business value is and how to correctly measure business value.
When I commented that the best way to measure customer value, is to ask the customer, there was some skepticism.
So let me show you how you can also measure Customer Value objectively, by asking the beneficiaries of the value (customers) themselves.
So just asking customers if you provide them with value, will always be helpful. There is no doubt about that and that means you can start now, BUT.
As value is such a fickle concept the response may be helpful but very difficult to action, though. It’s a bit like the Net Promotor Score, if they say you don’t add value, you know, but what do you do about it?
I discovered Jobs to be Done (JTDB) a few years ago when I read Clayton Christianson’s book the Innovators dilemma, and it was love at first sight!
I’m not, however, going to wax lyrical about JTBD and teach you what it is and how to do that (if you want to I can make some of our other resources available for you to discover the magic of JTBD). No, in this article I will zoom in on two JTBD techniques that are SUPER HELPFUL to understand value as the customer sees it, and then do it in such a way that you can immediately start auctioning what you have learned!
The first technique is mapping customer jobs. Normally I spend half a day teaching people how to do that, so here is a VERY short version.
But before I do that — I suppose I need to tell you what JTBD is (also at a high level).
The first person who talked about jobs was Peter Drucker and the concept explained by Christiansen was most probably born from the ideas postulated by Drucker.
Clay Christiansen explains JTBD like this — customers don’t buy your products or services for the service/product’s sake or to own it, they ‘hire’ your product or service to get a job done, or help them to get a job done, (also see Ted Levitt’s Marketing Myopia story about drills and holes).
So the customer needs to get something done and your product or service helps them to get the job done — that’s it! There is obviously more to it, but for the purposes of this article that is all you need to understand at the moment.
The first useful technique to understand what value you create from a customer’s viewpoint is job mapping.
Job mapping is understanding what the customer’s jobs are and after you have done that you can see how your product or service helps them to get that job done. Now it’s not that simple because there is probably a big job, broken down into small jobs, broken down into tasks, and then there are different role-players (and I’m not going into the detail here) but the most important is the primary job-performer. Unless you have spoken to the job-performer, you most probably don’t understand the JTBD!
If you don’t understand the JTBD, you also don’t really understand how your product or service creates value for customers, which is pretty logical. But here is the kicker!
Mapping JTBD also helps the customer to quantify the value you create because for the first time they have actually thought about how your product or service makes them successful and then it’s easier to quantify your contribution.
Conducting Switch Interviews
Switch interviews should be done very soon after you either gained a customer or lost a customer. It is really important that the customer still vividly recollects the journey that lead to the decision being made for, or against your product or service.
The purpose of the switch interview is to understand why the customer decided for or against your product, but it’s quite often difficult for them to explain it. Your job is to help them better understand the decision and therefore help you to learn from it.
It is helpful to understand the journey that leads to the switch event! Have a conversation about where it all started, the events that lead to the decision, the decision itself (including the transaction made), and then their experience after the event.
These insights are super valuable and provide actionable insights for the company regardless of whether the customer hired your product or fired your product.
Now I hear you say, yes the switch interview seems reasonable to do but the job mapping exercise sounds complicated and time-consuming.
Common questions and answers
You most probably have a ton of questions, here are some of the common ones (and objections) we hear;
1. Do I do this for every customer?
Ideally yes, and as broadly possible.
Remember that the conversation is about the customer’s job and not your product!
Also remember to ask if the job is part of a bigger job, and map that also. You may even be able to help the customer do the bigger job if you are lucky, but at the very least you will get some helpful clues on how to improve your product or service.
2. How often do I do it?
That is a very difficult question to answer. More often is better but try and do it at least once a year (you don’t have to do it for every customer if you have 1000’s, choose a few) and every time you make significant changes to your product or service.
3. Who should be involved?
Understanding the job landscape is important as you want to talk to the right people, as a minimum the primary job-performer/s must be involved.
By just looking at job maps and related jobs, it is usually easy to see who else may have valuable insights.
From your own perspective, when engaging with customers always work in pairs, and make sure that the team doing the interviews have real insights into the jobs being mapped.
4. Who chooses who to be part of the mapping exercise?
This can be a real problem, especially if the customer has not bought into the value of mapping jobs.
Obviously, you cannot force people to be involved, and if you see that customers are unwilling to let key resources participate in the exercise, rather don’t do it. You will get the wrong data and resultantly make the wrong decisions.
5. What if customers don’t want to review mappings often (or never want to do it)?
Once again, you can’t (and should not) force people to participate, but here are some techniques you can use:
a. If the customer wants an SLA as part of what you offer, write job mapping and reviews into the agreement. Get the customer to agree that this is how customer satisfaction or value perception will be measured.
b. Incentivise them to do it. Now I know that this is not possible in all instances, but here is something we do with our software or SAAS customers. Offer a discount if the customers allow you to do it. That can be a discount on the annual license, the annual maintenance, or the SAAS subscription. Always make sure that the discount is bigger than the cost of the effort they need to take.
You may also say, margins are tough, we can’t afford discounts. Our answer is and can you afford to lose a customer? Doing this will help you fix issues before it gets to that. Remember the cost of replacing that customer is MUCH higher than what you believe. Discounts are a great incentive — especially if margins are tights.
An added bonus is that you will frequently have real insight into the customer’s business and that is worth GOLD!
There are lots of others I’m sure, but the above will get you going.
I really hope that this article will be helpful, and that you will from now on stop guessing about the value you create, and that you will start asking customers first hand.
This I can promise, if you do, you will continue because of the value created.
If you find all the things described here bewildering, ADapT™ partner organizations across the globe can help you get this going. We can teach you the methods and even help you to do the work with customers if you are short on resources.
Agile ADapT™ is an innovation-driven, digital transformation and business agility method, specifically developed to help conventional (industrial age) organizations embrace the digital age. It is a simple, non-technical approach to digital transformation and you will see, real, tangible results in as little as 90 days. If you need help in transforming your organization, reach out to me and I will introduce you to the partner that works in your region.
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