Creating Customer Value Online

Let’s face it. Customers do not come to shop at an online store because it uses the latest technology or has stunning video and graphics. They come hoping the store offers solutions to their problems and needs. They are looking for value, as they see it!

Customers arrive thinking in terms of activities and solutions, but too often companies respond with products and services. While you may be anxious to tell visitors about your product’s newest features or your service’s great benefits, they simply want to know how you can solve their problems.

Companies who can help customers solve problems by providing offerings which fulfill customer needs, not just a list of features and benefits, will prevail because customers see them as providing real value.

Value Chains Create Value

Creating customer value is frequently illustrated as a value chain, a series of steps that change raw inputs into finished goods and services. A company creates value for its customers by adding unique features, benefits, services, etc. at each step in this process. Every company has its own value chain, and a general example is shown below.

linear value chain

This is a linear value chain in that each step follows from the previous one. Additions made at each step in the chain must be seen by the customer as adding to the overall value to the offering.

The Changing Online Value Chain

online value chain is based on information

The online value chain emphasizes
the flows of information.

When moving online, the value chain changes from a linear flow of physical goods and services to a multi-directional information flow. At each step in the production process, information is collected, analyzed and distributed to others. Over and above the goods and services themselves, this information can also be used to produce real customer value.

People decide to shop at a given store for more reasons than just low prices including:

Save time. Help people find the goods and services they want quickly and easily.
Lower risk. Provide complete information to help each customer make the best buying decision for them.
Things they love. Offer things people really want to have.
Status. Create communities with special offerings not available to everyone.

All of these depend on having good information about products, services, customers, markets and partners. Collecting, processing and distributing this information in ways your customers find useful for themselves can be a powerful way to create value.

Creating Customer Value

There are several ways to create value for your customers which work particularly well online.

Releasing Trapped Value delivers increased efficiency. Creating more efficient markets where people can find goods and services easier and at better prices has been done many times online. eBay is a classic example which transformed the local Saturday garage sale into a 24-hour worldwide marketplace. Providing new ways to do routine tasks also creates value, such as offering immediate downloads for important documents rather than have them sent by post.

New-to-the-World Value creates something entirely new that consumers will find useful and valuable. Who knew that we had to carry a thousand songs in our pockets until the iPod™ was introduced by Apple? Other ways to create new value include providing customized offerings for each visitor, enabling people to build communities of shared interests, and enabling collaboration among people separated by time and distance.

Combinations of different value creators can produce some of the most powerful ways to create new value. The online world is a flexible place where companies can try new offerings and quickly see what works best. Combinations can be used to disrupt current pricing structures while extending reach and access around the world.

Whatever value creation scheme is selected, providing better information is a proven way to create lasting customer value.

Finding Places to Create Value

Where does one go to find places to create value? An excellent place is activities which are ready for a change from current practices such as:
• No one else is doing this
• Unique experience for each visitor
• Special prices, packaging, delivery
• Use innovations from another business sector
• Help frustrated consumers complete a process

Many of these activities also involve connections: within a company, to outside partners, suppliers and competitors, and to customers. Improving these connections with better information can create lasting value.

Finally, whenever you hear the phrase “Wouldn’t it be great if someone could find a way to ___,” then listen carefully. Whatever fills in the blank, there is an opportunity to create customer value.

A version of this article appeared in 2011 on the PowerRetail website as Getting Started Online: Finding and Creating Customer Value.


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