Customers often start a negotiation by emphasizing price and product features. These things always matter, of course. But buying decisions encompass many other considerations, such as reliability, service arrangements, certainty of delivery date, and the opinions of users inside the organization or expert analysts.
Cumulatively, these influences may account for 70% to 80% of the purchase decision. That’s why there is gold to be mined by truly understanding the customer’s world.
The Customer Value Engineering approach goes beyond market research to uncover what customers will value and actually pay for, link these insights with the economics of the business, and create a process for building consensus and driving rapid implementation. It combines four capabilities:
1. Uncovering the drivers of demand
2. Segmenting customers in a smarter way than traditional categories of size or demographics
3. Modeling the drivers of business economics to determine whether a given move will make or lose money
4. Creating dynamic, robust modeling of the strategy that can evaluate “what if” scenarios and rapidly turn strategy into action with a minimum of risk
The inclusive and transparent nature of Customer Value Engineering helps to get everyone in the organization to channel their energies in the right direction, thus raising the odds of successful implementation.
Authors: John Hanson, Mike Sargent, Peter Frend
Source: Mercer Management Journal
Subjects: Management, Marketing / Sales