Customer value in practice
You’ve probably heard about “customer value” or “added value” and may have wondered what they actually are.
They, indeed, sound very important, but in case you have noticed yourself wondering about how to translate that value into something actionable, here’s a tool that may help:
Critical To Quality tree (CTQ).
CTQ comes from Six Sigma and provides a way to break down a fine sounding concept “customer value” into components that you can actually measure.
Let’s take an example from something that we all can relate to: a coffee break, and let the break represent the value that your customer is looking for.
Take a pen, sticky notes and your colleagues and you may come to more or less the below kind of definitions:
First, you define what the Need is.
Here, we can say that to stay productive at work, we need “nice coffee breaks”.
That Need is then impacted by Drivers.
Because we are talking about coffee breaks, we might agree that the drivers include the coffee itself and the atmosphere of the break.
You may come to some other conclusion when you start breaking down your need, but for now, let’s settle for this.
Drivers, in turn, have Requirements.
Your requirements for coffee could be Taste, Temperature and the Time it takes for you to realize you need a break to when it actually starts.
Again, there might be more, but let’s settle for these now for the sake of the exercise.
Last, you need to define the qualities of Taste in terms of Metrics that can be given Target values.
And there you have it.
So, let’s say that an ideal cup of coffee for you is certain amount of coffee of a certain brand with a combination of extras.
To measure whether your ideal coffee break was reached in terms of the coffee itself, you conclude that an ideal cup of coffee is two decilitres (+/- 2 centilitres), by either brand X, Y or Z and with 2 centilitres (+/- 2 millilitres) of milk and one teaspoon of white sugar.
That’s the first Requirement of the first Driver broken down into items that can be measured.
Then, break down the rest of your Drivers into their Requirements, Metrics and Targets and you can start measuring the performance of a “nice coffee break”, which, until this point, may have been just a vague idea that sometimes happens and sometimes not.
And, if you now continue measuring the individual factors, you can start agreeing with your customer, over a period of time, whether you managed to generate value or not.
Now the value is not a vague idea anymore. It is something that can be proven, because it can be measured.
Your customer’s value?
So, what are the words your customers keep describing their perceived value and how could you break them down into the above five elements?
Want to know more? Book a free 60-minute consulting call with us and let’s do your first breakdown exercise together!