When it comes to building customer loyalty and perceived value, there’s a common misconception that companies need to go above and beyond, exceeding expectations to ‘delight’ their customers. Yet, as Matthew Dixon, Karen Freeman, and Nick Toman articulate in their classic Harvard Business Review article, “Stop Trying to Delight Your Customers,” this belief may not necessarily hold the key to effective value creation.
Consider a three-generation extended family planning a vacation overseas. The family might benefit from a well-organized tour that provides rich cross generational travel experiences, bonding opportunities with instagramable views, and serious relaxation and food touring. Enhancing value for this family typically has involved focusing on the benefits on offer – for instance, by offering unique cultural immersion activities.
The prevailing approach, as encapsulated in models like Bain & Company’s “Elements of Value,” tends to focus predominantly on the benefits side of the equation. Bain’s model elegantly maps out an array of potential consumer benefits across four categories: functional, emotional, life-changing, and social impact. This has tended to blind, marketers into a pure focus on customer delight. However, it pays less attention to the concept of consumer sacrifices, and herein lies an overlooked opportunity.
A comprehensive understanding of value goes beyond the functional features or performance of a product or service. Instead, it encompasses the holistic customer experience, which is molded by a myriad of functional, emotional, and social benefits and sacrifices.
Functional benefits and sacrifices often serve as the bedrock of the customer experience. They directly impact the customer’s interaction with the product or service, shaping their assessment of its utility, reliability, and cost-effectiveness. However, the functional aspect is just one piece of the puzzle. Emotional benefits, such as satisfaction, joy, or reassurance, and emotional sacrifices, such as stress, discomfort, or disappointment, greatly influence the customer’s overall perception of value. They tap into the more subjective, experiential aspects of consumption that can often sway customer decisions beyond the bare functional attributes.
Moreover, social benefits and sacrifices play a vital role in shaping the value landscape in our increasingly interconnected world. Social benefits can provide customers a sense of affiliation, status, or acceptance, while social sacrifices may concern issues of image, social stigma, or even broader societal impacts.
In totality, the balance of these functional, emotional, and social benefits and sacrifices determine the customer’s overall expectation and experience of value ad according to Dixon, Freeman, and Toman, customer loyalty is more about making things easier for customers – in other words, reducing their effort – than exceeding expectations of delight. Their research suggests that reducing the sacrifices customers have to make can lead to a greater sense of value and foster deeper loyalty than simply adding more benefits.
In the context of service industries, this could mean focusing on efficient problem resolution, clear communication, and reducing customer effort in navigating your product or service. It means understanding that each customer interaction harbours potential friction points – costs, delays, misunderstanding, or even dissatisfaction – and working proactively to minimize them.
Let’s consider our earlier example of a family planning an overseas vacation. Yes, offering unique cultural experiences or special deals might add value, but what if we made it easier for the family to plan their trip? Providing straightforward booking processes, offering 24/7 customer support, addressing all questions and concerns promptly, and ensuring the travel experience is as comfortable and seamless as possible – these are the elements that reduce customer effort and sacrifice, and will probably add more value.
This does not mean that we should disregard the benefits side of the equation. Indeed, the benefits and sacrifices often exist in a delicate balance. However, our focus should be broader than simply ‘delighting’ customers by enhancing benefits; it should also include a thorough understanding of their pain points and anxieties, making deliberate efforts to reduce mitigate or eliminate them.
In essence, the new paradigm in value creation involves a change in strategy: focused on motivating benefits and minimizing sacrifices. While models like the Elements of Value provide a great starting point for thinking about benefits, we must not let it blind us to the significant impact of sacrifices on the expectations and experiences of customers. In our quest to deliver superior value, let’s remember – it’s not just about reaching for the stars; it’s also about easing the journey.