3.3 Almquist, Senior and Bloch (2016). The Elements of Value Measuring and delivering—what consumers really want. Flashcards
THE CHALLENGE
hard to know what customers value in a product. Often an emotional benefit such as reducing anxiety is as important as a functional one such as saving time. How can managers determine the best way to add value?
THE ANSWER
The authors describe 30 “elements of value” that meet four kinds of need—functional, emotional, life changing, and social impact—and that, when optimally combined, increase customer loyalty and revenue growth.
The elements of value work best when a
company’s leaders recognize their ability to spark growth and make value a priority
Companies should establish a discipline around improving value in three areas
new-product development, pricing, and customer segmentation.
Companies that score high on emotional elements tend to have a higher
NPS, on average, than companies that spike only functional elements.
- New-product development
the model can stimulate ideas for new products and for elements to add to existing products
- Pricing:
Higher prices change the customer valuation, so any discussion about raising prices should consider the addition of value elements.
- Customer segmentation
When segmented the customers it becomes easier to analyze what each of these groups value and then develop products and services that deliver those elements
Three patterns of value creation
- Some elements do matter more than others.2. Consumers perceive digital firms as offering more value3. Brick-and-mortar businesses can still win on certain elements
- Some elements do matter more than others. 2
a. perceived quality affects customer advocacy more than any other element.
b. After quality, the critical elements depend on the industry
b. After quality, the critical elements depend on the industry 3 examples
i. In food and beverages, sensory appeal.
ii. In consumer banking, provides access and heirloom (a good investment for future generations) are the elements that matter
iii. heirloom is crucial in financial services generally, because of the connection between money and inheritance
- Consumers perceive digital firms as offering more value
a. Well-designed online businesses make many consumer interactions easier and more convenient. Mainly digital companies thus excel on saves time and avoids hassles
- Brick-and-mortar businesses can still win on certain elements
a. Omnichannel retailers win on some emotional and life-changing elements. For example, they are twice as likely as online-only retailers to score high on badge value, attractiveness, and affiliation and belonging.
Higher values: 2
- Need lower values first
- Point-of-Parity vs Point-of-Difference
More is ‘better’:
- Looked at companies Net Promotor Score (metric for customer loyalty and advocacy) and company’s revenue growth. Companies that were given an 8, scored three times better on NPS than other companies. So more is better for revenue growth.
