The Value Lift Methodology (Video)

Increase Customer Demand for Existing Products And Services



Video Transcript

One thing you can count on is that changing customer-provider realities will affect how customers evaluate your company’s offerings. Your current customers continue to hire your solutions to get important jobs done because they are the best value out of competing alternatives. But this best value status can shift abruptly to competing solutions for two reasons. First, the job priorities of customers can change. If you do not enhance your solutions to satisfy these changing job priorities, customers will struggle to get the job done. This gives rise to important and unsatisfied needs around your solutions that can be exploited by competitors. Second, competitive solutions can get better and/or cheaper which increases the perceived value of these offerings relative to your solutions.

This is why it’s important to continually track the perceived customer value of your offerings. Because customer-provider realities are always changing, managing customer value needs to be dynamic and responsive to these changes.

First and foremost, you want to keep the customers you have and make sure that your solutions remain positioned as the best value for them. Further, you want to maximize their use of these solutions. Second, you want to attract customers who are using competing solutions to grow your customer base.

The Value Lift methodology, or VLIFT for short, is a component of the Demand Creation System that enables your company to maximize the profitable revenue potential of your current offerings. It does this by keeping your offerings positioned as the best value for customers while minimizing the cost structure of the offerings.

Competitors will fight hard to retain their customers and to acquire your customers. Such is the nature of competition. But all too often, the selling price is the primary lever used to bolster customer value. This inevitably leads to price-based competition, something you want to avoid. Yet, it is best value, not the selling price that ultimately creates customer demand. While the selling price determines the magnitude of something we call the customers’ value surplus, the price is not the final demand creation trigger. And this is the key to understanding how VLIFT works.

VLIFT begins by surfacing important and unsatisfied needs that your customers have using your offerings to get important jobs done. These are the customers’ job priorities and they are defined using metrics of satisfaction, namely customer value metrics and the customer’s success outcomes.

Target values are then set for priority customer value metrics or CVMs that will lift the perceived value sufficiently to satisfy job priorities better than the customers’ next best solution. Next, we delineate the service-process engine, a model that describes the logic of how a service works.

A current state model is developed that reveals all the processes that comprise a service and the various resources that these processes integrate to generate customer benefits. We then look for all VLIFT opportunities that can increase the perceived customer value of an offering while simultaneously eliminating the use of unnecessary resources that increase its cost structure.

The best combination of VLIFT opportunities are identified that can move the current state service-process engine to a future state that will hit the customer value metric targets defined earlier. There are six VLIFT opportunities —

Address job solution gaps via a combination of information technology and lean work design; enable customers to get the entire job done.

  • Tailor your job solution to customer segments by eliminating features that have little or no value to these customers and adds to the cost structure. Consider reducing the selling price for these customers.
  • Shift customer-side complexity to the service-process engine via process automation. Increases ease of use for customers while lowering provider costs.
  • Remove the Time and variation in the service-process engine that creates dissatisfactions via a combination of Lean, Six Sigma and information technology.
  • Break unsatisfactory trade-offs involving the time, effort, sacrifice, risk, quality, and performance that customers are reluctantly willing to make to obtain and use your service.
  • Eliminate job constraints by removing the obstacles and barriers that prevent a job from getting a job done well or at all.

Enhancing your service in response to changing job priorities keeps the customers’ willingness to pay for the service elevated. The difference between the willingness to pay and selling price is the customer’s value surplus.

Finally, set a selling price for your offerings that generates sufficiently greater value surplus than competing solutions. Ultimately, job solutions that offer the greatest value surplus are the ones that create customer demand.

Customers buy solutions they perceive to be the best value, not necessarily the least expensive. VLIFT enables your offerings to maintain a higher differential value than competing solutions at a lower cost structure. This allows selling price reduction over time to respond to competitor pricing without eroding profitability. Competitors may continue to lower their selling price, but if the value surplus of your offering is sufficient higher, the lower price does not make a competitor’s offering the best value. Eventually these competitors will concede the business or go out of business. Meanwhile, your company prospers.