- PRICING STRATEGY: PRICE SKIMMING!
- PRICING STRATEGY: GIVING YOUR PRODUCT/SERVICE FOR FREE
- SHOULD WE COMPARE OURSELVES?
- WHAT SHOULD WE MEASURE WHEN WE EVALUATE OUR MARKETING EFFORTS?
- WHAT IS THE VALUE OF A CUSTOMER?
- DOES CONTENT MARKETING WORK?
- WHAT IS THE DIFFERENCE BETWEEN A BRAND, BRANDING, A PERSONAL BRAND AND A COMPANY/PRODUCT NAME?
- WHAT IS GROWTH HACKING?
- HOW MANY « P » CAN BE FOUND IN THE MARKETING MIX?
- THE CUSTOMER VALUE CHAIN
- HOW CAN YOU PROTECT YOUR UNIQUE PRODUCT OR SERVICE?
- CONFERENCE ON FINANCING - MAY 2, 2017
- WHAT IS DRIP PRICING?
- WHICH AMOUNT SHOULD YOU CHOOSE FOR YOUR PRICES?
- DETERMINING YOUR HOURLY RATE BASED ON THE VALUE YOU THINK YOU HAVE
- IS LOWERING YOUR PRICES A GOOD IDEA?
- TO OFFER OR NOT TO OFFER FINANCING?
- HOW TO PROTECT YOURSELF AGAINST EXCHANGE RATE RISKS
- WHEN IS A GOOD TIME TO INCREASE YOUR PRICES?
- DEMAND BASED PRICING
- WHAT IS A LOSS LEADER?
- HOW TO ORGANIZE A DRAW THE RIGHT WAY?
- HOW TO HAVE REMOTE EMPLOYEES
- IS IT GOOD TO BE FIRST IN A MARKET?
- THE THREE TYPES OF CUSTOMERS
- EXPORTING TO MEXICO - QUERETARO REGION
- DEFINING BUSINESS SUCCESS
- ARE YOU USING REBATES? WATCH OUT FOR THESE
- IS THE CUSTOMER ALWAYS RIGHT?
- EXPORTS AND QUEBEC COMPANIES
- COWORKING SPACES
- YOUR PLACE OF BUSINESS AND INTERNET
- WHY IS SOCIAL MEDIA IMPORTANT FOR YOUR BUSINESS?
- HOW TO USE FREEBIES
- WHAT IS THE MAGICAL FORMULA FOR HAVING SUCCESS IN BUSINESS?
- DO YOU HAVE EXPERIENCE IN MY FIELD?
- WHEN CAN WE STOP OUR MARKETING?
- WHAT IS A CALL TO ACTION?
- WE ARE ALL SALESPEOPLE; HERE'S HOW TO GET THERE
- HOW CAN MARKETING AND SALES COLLABORATE?
- HOW TO SELL MORE TO YOUR EXISTING CLIENTS
- WHAT IS CROSS-MARKETING?
- WHY SHOULD I SEGMENT?
- WHO IS RESPONSIBLE FOR MANAGING YOUR COMPANY'S IMAGE?
- HOW TO CHARGE FOR YOUR PRODUCTS / SERVICES?
- HOW TO DEFINE YOUR PRICING STRATEGY: PRICE POSITIONING
- HOW TO DEFINE YOUR PRICING STRATEGY: MARKET PRICING
- WHAT PRICE SHOULD YOU SELL AT? - COST-BASED PRICING
- WHAT IS A PRODUCT?
- HOW TO MARKET YOUR NEW BUSINESS?
- IS BUYING A FRANCHISE A GOOD WAY TO START A BUSINESS?
- HOW SOCIAL MEDIA HAS CHANGED WORD-OF-MOUTH
- HOW SOCIAL MEDIA HAS CHANGED PUBLIC RELATIONS
- WHAT IS BRANDING?
- WHY INCREASING SALES IS NOT THE SOLUTION
- HOW TO SELECT YOUR COMPANY NAME?
- WHY HAVING A WEBSITE IS ONLY THE BEGINNING?
- WHAT IS MARKETING?
- HOW TO MAXIMIZE THE VALUE OF YOUR SOLE PROPRIETORSHIP BUSINESS
- WHY SELLING IN MEXICO?
- LOW COST MARKETING INITIATIVES
- WHY IS PRODUCT DIFFERENCIATION IMPORTANT?
- hOW TO PRESENT OUR COMPANY
- WHAT IS THE DIFFERENCE BETWEEN MARKETING AND PUBLICITY?
- 50% OF YOUR ADVERTISING BUDGET DOES NOT PRODUCE AS MUCH AS THE REST
- RIGHT SELL AND OVER DELIVER
THE CUSTOMER VALUE CHAIN
For those who have studied administration and marketing, the concept of Porter's value chain is well known. It can be summarized by all the activities carried out by the company to increase the value of a product or service. Depending on the who and the why of the analysis, the focus can change: creating value for the shareholders, the managers, the employees or the customers. Normally, everyone's interests are aligned, but not always. For example, when launching a new product: the value created for the shareholders is in the future, while for the customer it is right away.
In this article, I will look at the customer value chain for the service industry customer. What is so special about the service industry? The customer is both the input and the output of this process.
The best way to illustrate this concept is to imagine a factory with an assembly line. Each station represents a stage in the transformation process that adds value to the initial input. Let’s think about a canned tomato sauce manufacturing plant with the following inputs: tomatoes, ingredients, water, cans and labels. (It's possible that I've forgotten some aspects as I'm not an expert in canned tomato sauce.) Each station transforms the product: peeling, chopping and cooking the tomatoes, and adding the ingredients that result in making a succulent tomato sauce. At the end of the process, the product is canned, the labels are applied, and everything is packaged and ready to be shipped.
For a service company, the main input is the customer. Let's compare the stages of the process as we did with the tomato in the previous example: the different stages in the transformation process are completed to satisfy the customer. How can you copy this model? Take an accounting firm that specializes in preparing income tax return for companies. The input is the customer who has not filed tax and the output is the customer who has fulfilled his responsibilities by paying his/her taxes. The intermediate stages are the actions required to achieve the final goal: paying the taxes. So there are several stages: preparing the service offer, collecting the supporting documents, reviewing the previous financial statements to understand the current situation and previously used accounting standards, presenting the preliminary financial statements, making any necessary corrections, having the financial statements approved, preparing the tax return, paying them, sending the duly signed documents and following up if the government has any questions. Have I forgotten any steps?
Why is this analysis important for your business? There are several reasons. Previously, I wrote an article on "loss leaders" and how to use them to bring new customers into the transformation process. One of the strategies that some tax companies use to get new customers is to estimate the amount of money you could save or receive from the government by doing business with them. Some even use strategies such as not charging customers service fees and taking a percentage of the returns instead. I am neither endorsing nor criticizing these tactics; I am simply presenting them to illustrate how part of the transformation process can be used to encourage the customer to come to you. In understanding your value chain, you can use part of the process and offer it to the customer as an incentive.
The other important aspect to consider is that once your company is well established, you can transfer stages in your value chain to junior employees or subcontractors. In understanding at which stages you can maximize your contribution and which stages you can delegate, your profitability increases while you keep your customers happy.
If you have any questions or comments, please do not hesitate to contact me.
Stéphane Elmaleh-Riel, B.Ed., MBA