Customer Solutions / Bundling
Customers don’t want products or services . . .. . . they want outcomes.
“People don’t want a quarter-inch drill. They hire a quarter-inch drill because they want a quarter-inch hole.” – Theodore Levitt (Harvard Business School)
Yet looking at the offer in most sectors today, the ‘product approach’ still clearly domi-nates… but we believe the tide is starting to turn.
Progress in customer intimacy and in understanding what really creates value for cus-tomers is pushing an increasing number towards the development of customer solu-tions / bundles, combining products & services to provide ‘outcomes / experiences’
There are plenty of good reasons to Create a Value-Based / Solution Offer
- Overcoming the commodity mentality
- “We sell productivity, not products.” (Gerry Salazar, Castrol International)
- Selling the smarter buyer
- Demonstrating impact on the business – Building on your differentiators to gain com-petitive advantage
- Differentiating / Creating a smarter buyer
- Providing information to help the customer make an intelligent choice
- Helping the customer understand what they need and they should look for
- Increasing Profits
- Higher potential margins … if we create value
- Better defense against competition
Recent evidence clearly point to increase success & profitability for companies that embrace ‘Customer Solutions’. Indeed, a recent survey of industry leading companies in North America shows that Customer Solutions’ companies vastly outperform their peers, with only the ‘System lock-in companies’ (that own a dominant platform) as providing an even more performant angle.
From Boing to Tesco, Syngenta and Raytheon to Orange and Michelin, an increasing number of companies are embracing Customer Solutions strategy to boost competitive-ness & profitability.
But getting there is not easy. Clearly central to the journey is the ability to evaluate / anticipate what creates Value for customers and to base the development of new of-fers / value propositions on that understanding (Value Base Design)
But, is that is all that they are, bundles or slight service additions are quickly copied and will not give a long lasting competitive advantage.
Client Value Strategies deigned to produce lasting competitive advantage should aim to combine 3 levers that together will pro-vide strategic control
Superior Value Propositions
Measure & anticipate Key Value Drivers for customers & implement Value Based Design approaches to develop superior Value Propositions
Competitive Dynamics Insight
Proactively monitor current & potential threats As well as future Business De-signs so as to be able to maintain”
Superior Business Design
Be able to deliver superior value while keeping cost advantage through Superior Business Design
Overcome organizational inertia & resistance to changes in order to become unified behind a commonly shared strategic intent
Through successful ‘Customer Value’ projects with clients, PriValEdge has de-veloped a robust and proven approach to creat-ing Client Value Based Businesses, starting from the development of pric-ing & Value processes & systems and taking it fur-ther into Value Base De-sign and the development of Customer Value focused Business Designs
Such approaches require already a strong estab-lished Value culture and are typically reserved to level 3 or 4 companies.
They represent important changes in the ‘way of doing business’ for the SBUs con-cerned, representing a medium to long term project… but also (when successful) a chance to dominate a ‘niche’ or a whole market for a number of years.