Rethink Value for Long-term Customer Success

Author’s Note: This post is the second of three posts that dig into how AI can positively impact an organization’s growth and profitability, but first companies have to make a shift in their organizational mindset, particularly how they prioritize their internal investments.

Bottom line: They have to prioritize creating customer value.

Which is where this second post comes in: The importance of customer value and how it’s created—which is in the minds, hearts, and ultimately wallets of customers.

The final post is about how AI can create longterm realizable gains in revenue, profitability, and productivity—but, only for those companies who have changed how they think about their investments and who choose to invest in AI—in the right way, with the right purpose, for the right end result.  You’ll find the link to that post at the bottom of this one.

And, if you’d like to go back and read the first post, it’s “Prioritize Strategic Projects that Drive Customer Value for Sustained Growth.”

So, let’s get into creating customer value.

The Importance of Value—and Where Some Companies Get It Wrong

There is this belief that all customers receive value from a product or service they buy. Now, if that was true, each February, you wouldn’t see 90% of new gym members not using the gym after 30 days of signing a new contract. Because just receiving a good or service in exchange for cash is not how value is created.

Value is the additional benefit a buyer receives beyond what they paid for the product or service. If they only get what they thought they were buying, then you just met their expectations which is the bare minimum you have to deliver to keep a customer.

For example, think about a person who books a vacation to spend time at the beach. When they arrive at their hotel, and they walk to the beach, they see the ocean. That’s what they expected and what they paid for.

But, what if, instead, when they check in, the hotel concierge already has a spot set up for them with an umbrella to shade them and sets them up with their favorite cocktail, along with a book they’d likely want to read and in the area that’s facing sailboats because they know, from their customer profile, the person loves sailing and reading and cocktails—and all of this provided at no extra cost to the customer.

This is how value is created.

And, it’s how customer loyalty is built. How repeat business, organic growth, affinity and advocacy are created. They all happen because of value.

If you aren’t delivering value ABOVE what the customer believes they were already paying for, then you aren’t delivering value. Instead, you’re simply delivering an equal exchange of product/service for cash. And, that does not create loyalty, advocacy, organic growth, or repeat business.

So, now, let’s go back to how companies have to change their mindsets, as discussed in my previous post. Value to shareholders is delivered through their stock going up and trends that illustrate their stock is likely to continue to go up—not only higher than what they purchased the stock at, but higher than the return they could get from investing that money in another company. And, that value is short-term because investors shift money around for themselves and their clients on a regular basis.

So, shareholders want to see that companies are more profitable than they expected—meaning their revenues are higher than their costs. And, things are looking better for the next quarter or the next year. Which is why so many companies do layoffs shortly before they have to do annual reporting to investors. Because they didn’t invest in the long-term, customer-focused projects that would actually deliver strong revenue growth, so they can’t show profitability through revenue growth. They can only show it through cost-cutting, and labor is typically one of the highest costs and one of the easiest costs to get rid of.

Again, this is short-term thinking. And, it is disastrous longterm to companies because it negatively impacts their brand, negatively affects their ability to recruit and retain talented, dedicated, loyal employees, but it also becomes a system of thinking that prevents their company from actually making a positive impact with their customers.

Because customers know when they’re not the priority. They know when they’ve been given a sub-standard experience that is meant to cut organizational costs by forcing them to use a chatbot when they’d rather pick up a phone. They know barriers are being created to force them down a path that puts more work on them—when the whole reason they want to call is because what they have isn’t serving them in the way they thought it would when they purchased it, and They. Are. Pissed.

Alternatively, in the case of consumer subscription products, barriers are deliberately created to try to make it harder for the consumer to end their subscription—so you have to use a phone number because they want to do everything they can to talk you into not cancelling your subscription—because you can’t easily cancel using a chatbot or their app you used to sign up with. Again, customers are pissed.

These are just 2 common examples of how companies funded experiences that have absolutely nothing to do with serving customer needs and everything to do with serving their bottom line goals. For one, what the customers want is to connect by phone. For the other, what the customers want is not have to connect by phone. But, this is what happens when a company prioritizes the wants of the board and shareholders over the wants of the customers.

Now, because chatbots, particularly in Service, are a common use case for AI and certainly, since conversational AI has blown everything up, we’ll talk a little about chatbots in the next post. I worked on my first chatbot experience around 2017, building the conversational strategy for an AI-based chatbot, and, over the past 7 years, it’s still one of the best use cases I’ve seen for how to use a chatbot to lift the customer pain while drastically cutting operational costs. But, that project was started from the beginning with a customer-centric purpose in mind that just happened to save the company almost a million dollars each year.

You’ll get that story along with a breakdown of how companies are wrongly thinking about AI projects and how they should be thinking about them—from a customer-centric, data-centric approach in the next post, “How AI Unlocks Customer Data for Long-term Profitability.”