Ask three people what they mean by “value,” and you’ll get five definitions. Unfortunately, that lack of clarity means that your stakeholders and colleagues won’t understand the different concepts behind value and will talk at cross-purposes, which wastes time and energy, holding back your organization from making the changes it direly needs.
When discussing value within your organization, first always get clarity by asking two questions:
- What’s your definition of value? There are two major ones.
- Whose perspective are you considering? It could be the customer or the company.*
When you do that, you get four key concepts that you should know more about:
1) Values-Based Customers
Values-based consumers make decisions to do business with a company based on how much their own moral, political, and social values align with those of that company. Specifically, these customers evaluate their purchases in context of the product’s, brand’s, or company’s values around employment and manufacturing practices, political and social stances, and commitment to other causes or beliefs. Forrester has found that the share of values-based consumers in the overall population is increasing.
2) Values-Based Companies
Values-based companies make strategic and operational decisions rooted not just in generic corporate values such as “integrity,” “shareholder return,” or “innovation” but also based on moral, political, social, or religious values. The values these companies stand for become part of their value proposition. Well-known examples include Ben & Jerry’s, Chick-fil-A, Patagonia, and Dick’s Sporting Goods. Building consumer values into the brand and bringing their own values to life in a systematic way can contribute to better business results. Note that company values differ from a company’s purpose or vision — and read more in an upcoming blog by my wonderful colleague Anjali Lai.
3) Value For Customers
Value for customers is the customers’ perception of whether they get more than they give up when doing business with a firm. It has four dimensions: functional value (purpose, utility, ease), experiential value (pleasant interactions and sensations), economic value (price and costs), and symbolic value (meaning in relation to self and others). Note that perception is reality when it comes to value for the customer. Which type of value is more important in decision making depends on the customer and the specific situation. Companies need to find their value for the customer sweet spot — which is at the intersection of what customers need, what the brand can offer, and the competitive white space. Also, when designing loyalty programs, benefits must be in line with what customers value.
4) Value Of Customers
Value of customers is the value a company ascribes to a customer. Customer lifetime value (CLV) is a familiar metric to measure that — but the value of customer can go beyond CLV.
Once you have parsed out the different definitions of value, you’ll see that these concepts intersect in crucial ways. For example, values-based consumers get a lot of value — specifically, symbolic value — from doing business with organizations that align with their values.
Thank you for reading. Please share whether this blog post was valuable to you — you can email me at mschmidt@forrester.com. And if you want to read more, check out the reports linked above.
Also, consider joining me and other Forrester analysts for the CX North America 2020 Forum: The time to achieve more by knocking down the silos between marketing and CX is now.
A huge thank-you to my colleagues Rick Parrish, Anjali Lai, Brigitte Majewski, Brandon Purcell, Emily Collins, Jim Nail, and Nigel Fenwick for contributing to this blog post.
* In reality, you could add the “employee” as the third perspective here. But for simplicity’s sake, we are focusing on the customer and company. On that note, the reason we honed in on “company” as the second perspective is that we find this confusion around the term “value” comes into play most often with for-profit companies, especially those aiming to drive shareholder value. But the idea also applies if you work for a nonprofit or government organization.