What Customers Truly Value? 30 Elements (Bain)
Marketers have generally spent much time and effort on the pricing side of the value equation (marketing mix), because it is the easier part. Given the psychological complexity and analytical difficulty, few studies have been done to understand what customers truly value, allowing companies to improve the value proposition of their brands / products.
Almquist, Senior and Bloch (2016) identified 30 ‘elements of value’
in 4 categories of customers' needs – functional, emotional, life changing, and social impact. These comprise the universal building blocks of value that customers normally appreciate. The survey conducted by the research team indicated that offering certain optimal combinations of value elements improve customer loyalty and as a result revenue growth and company performance.
Interestingly, the research also found three patterns of value creation worth of special notice:
- SOME ELEMENTS MATTER MORE THAN OTHERS. Perceived quality is the king, and no other elements can make up for a significant shortfall on it. The critical elements after this vary from industry to industry.
- DIGITAL FIRMS ARE PERCEIVED AS OFFERING MORE VALUE, excelling on elements of "Saves time" and "Avoid hassles".
- MULTICHANNEL BUSINESSES STILL WIN ON CERTAIN ELEMENTS, such as some emotional and life changing elements. Combining online and physical channels (Bricks and Clicks) is proving to be more powerful than either one alone.
The 30 elements can help companies to identify new value to offer, and to refine their product design, delivering more elements. Also they can help identify where customers perceive the company’s strengths and weaknesses.
To allow the above, creating customer value
needs to be put as a priority on the agenda of company leaders and it has to be regarded as a key discipline in certain areas like product development, pricing, and customer segmentation
. Also there should be someone in the company to explicitly think about, manage, and monitor value.
Source: Almquist, E., Senior, J. and Bloch, N. (2016). The Elements of Value: Measuring and Delivering What Consumers Really Want. Harvard Business Review, 94 (September), pp.47-53.