Many businesses today are simply not delivering the value their customers expect. This article covers why and how you can bridge this customer value gap, providing actionable strategies that will improve the value your organization delivers.
The need to mind the gap
Today’s consumers want personalized, seamless and valuable experiences. Changing market dynamics with lower barriers to entry mean that even incumbents must evolve to ensure they exceed the expectations of their customers. If they don’t, they risk being overtaken by current competitors or disrupted by new market entrants.
When customers don’t receive the value they expect, they are more likely to switch to a competitor, leading to decreased customer retention and reduced revenue. On the other hand, by successfully addressing your customer value gap, you will increase customer satisfaction, loyalty and advocacy, ultimately driving business growth and profitability.
Ways to view the gap
Qualitative and quantitative data from customer interviews, satisfaction surveys, analytics and other sources can increase your understanding of your customer's needs, preferences and pain points. Equally importantly, this data will help you pinpoint where your business may fail to deliver value.
Think of the customer's perspective as the primary lens through which to view the gap. At Thoughtworks, we also help our clients consider the transformation needed for their organization to better sense market changes, respond faster and be more effective in their value delivery. By identifying areas for improvement, you can develop targeted transformation strategies to enhance your customer's experience and close the value gap.
Strategies to close the gap
1. Shift to a value-driven operating model
Many businesses focus on minimizing costs and maximizing efficiency. However, this strategy often leaves customers wanting more. To remain competitive, you should adopt a value-driven operating model that puts the customer at the heart of your business strategy. This means redefining success based on value delivery rather than operational efficiency or ROI. This can be a significant challenge, as it might mean changing business objectives, success measures, organization design or the methods of funding your initiatives.
2. Adopt a customer-centric culture
A customer-centric culture means recognizing the value of prioritizing customer needs. By focusing on your customer's journey across all channels and touchpoints, you can create a seamless end-to-end service, as opposed to the often fragmented experience customers face when dealing with businesses. By encouraging your employees to listen to, interact with and understand your customers with greater depth and sensitivity, you are more likely to create products, services and experiences that deliver true value.
3. Embrace cross-functional collaboration
Agile companies do not necessarily deliver faster but instead aim to be more aware, responsive and nimble. By breaking down silos and bringing together people from different functions, you can streamline processes, be more innovative and deliver value to customers more rapidly.
4. Invest in technology and infrastructure
Modernizing technology systems and infrastructure will help you deliver customer value efficiently and effectively. This includes adopting platform architectures and solutions that enable greater adaptability, scalability and flexibility in responding to market trends and customer needs.
5. Leverage data to drive value
Data and analytics are crucial in understanding customer needs and preferences, and in identifying new opportunities to increase the value delivered. Data will also help you close feedback loops and determine what's working (or isn’t). This requires building technology capabilities and business processes that enable easy access to relevant and actionable data across your organization.
6. Discover new paths to value through experimentation
Continuous learning through experimentation will help your company innovate and rapidly verify new ideas and projects. Value-driven portfolio management, where empowered teams work towards prioritized outcomes, means faster time to market and more transparent funding by being clear on the metrics your initiatives should impact. With the courage to acknowledge that some ideas will fail, and through early and frequent feedback, you will increase the value delivered and demonstrate a real return on the investments you start and decide to continue funding.
7. Measure outcomes over outputs to continuously improve
Addressing the customer value gap is an ongoing process that requires continuous monitoring, evaluation and improvement. Here, what you measure will determine what you improve. It is completely possible to “be more efficient” yet deliver less value. By tracking performance against customer value metrics and shaping your operating model to include a repeated cycle of learning and improvement in the areas that matter, your organization will be set up for increased value delivery — and have the data to prove it.
Conclusion
To appeal to your customers, be better positioned to deliver on expectations and win in the market, you must put your customers first with targeted strategies to maximize the value you create for them. This often requires transforming how you operate, changing your culture, investing in the right technology, leveraging data, experimenting and constantly seeking to improve. In return, you will see real progress toward closing your customer value gap and positioning your business for continued and lasting success.
