WHAT DO CONSUMERS VALUE MOST?
This is a question most every company seeks to fulfill. Companies work to improve customer experience and value and to spark growth. Companies that work towards these three goals often in return receive customer loyalty. According to Maslow’s (American Psychologist) hierarchy of needs, a theory of psychological health predicated on fulfilling innate human needs in priority, culminating in self-actualization. The five steps human motivations move through. The pyramid in Figure 1 shows Maslow’s Hierarchy of needs, it starts with the more basic needs at the bottom and build up to the more specific needs.
Maslow’s Hierarchy of Needs
- Physiological: food, water, warmth, and rest
- Safety: security and safety
- Love/Belonging: intimate relationship and friends
- Esteem: prestige and feelings of accomplishments
- Self-actualization: achieving one’s full potential including creative activities
ELEMENTS OF VALUE
In today’s customer centric products and services Maslow’s hierarchy of needs applies to businesses as well. Research conducted by Bain & Company has found a relatively small set of ways to satisfy customers. Bain calls these the Elements of Value. The Elements of Value comes from the framework of Maslow’s hierarchy of needs.
The Elements of Value pyramid resembles Maslow’s pyramid in a general way of starting with basic needs and building up into more specific needs. In the Elements of Value pyramid is filled with 30 elements and the elements are grouped together and separated into four sections as you can see below in Figure 2. These four sections demonstrate an easier concept of how a company builds value.
The Elements of Value
- Functional Elements: What a product does for the consumer.
- Emotional Elements: How a product or service makes the user feel.
- Life Changing Elements: How a product or service changes the customer’s life.
- Social Impact Elements: How a product or service delivers value to society.
The Elements of Value can be used to improve business performance and change the game. The Elements of Value can improve performance by identifying and capitalizing on their relative strengths to widen leads within their category on elements that matter. Companies can also change the game by adding new Elements of Value to their category. Often times companies have “white spaces” in their categories and by adding new Elements of Value the company can begin to drive value and differentiate in these “white spaces.” Bain & Company’s analysis show that companies that deliver well on the elements of value tend to have stronger customer loyalty and higher revenue growth rates.
HOW TO APPLY ELEMENTS OF VALUE IN YOUR BUSINESS
Most companies want to see huge strides of progress happen overnight, however that is less likely to occur. Smart steps for a company using the elements of value is to work towards incremental innovation. Incremental innovation is taking new forms of customer value, to the company’s present product and service. So, from the elements of value pyramid, choose which element to add to boost the value of the company’s offering. Once you have chosen which elements best boost the company’s offering, prioritize your chosen elements. Then, build experiments using lean methodology to validate your values. If the experiment is successful, apply the elements of value in all aspects of your offerings. Figure 3 shows how to apply the lean methodology.
The Lean Way – Experiment
If your company is seeking a method to help boost your offerings or in a growth mode, let the strategists at eBiz Solutions help you. At eBiz Solutions our strategists have more than 20 years of technology experience. We look beyond technology and straight to the results. Click here to contact us.