What is value to customers?

The important question to be answered is: how do customers make choices? Customers have many alternatives to choose from. Even if there are no obvious alternatives, they can choose to spend their money on a different product altogether, make or produce the product themselves, or use their time in a different way.

Organisations need to provide products which are of value to their customers. Some customers will have no choice at all about which product to use, but even for them it is important that organisations consider what they require from a product.

A lack of choice does not necessarily imply a one-way process whereby the supplier dictates the nature of the product. A process of negotiation and agreement is important in the development of a situation in which both supplier and customer are happy with a product.

The following example shows that, even when customers do not have a choice, it is still important to talk to them to find out what they want from a service:

“A householder was supplied with a domestic waste bin and was told that she could be fined for leaving it on the pavement overnight, even though she had not wanted a bin in the first place and was rarely up in time to put it out for a 7.30am collection. A council spokesperson was reported by a local paper as claiming that the householder might be held responsible if the bin caused an obstruction, injury or damage, because 'the law is not clear’. This is a good example of a ‘we know best’ situation. The householder had little or no influence over the nature of the refuse collection service.”

Collins English Dictionary defines value as: ‘reasonable or equivalent return; an amount considered to be a fair exchange in return for a thing; satisfaction’. This brings us back to the initial idea of an exchange relationship. The challenge for commercial organisations, and for the people who work for them, is to find ways to ensure that their products will be considered of greater value than those of their competitors.

Organisations constantly strive to increase the value of their products so that their customers will perceive the return offered to be fair and reasonable. Customers will always compare one organisation’s offerings with the alternatives, and this is why we see products constantly changing and developing.

The challenge for public sector and non-profit organisations is to make sure that in every relationship they have, the nature of the exchange is developed through the processes of negotiation and agreement to the satisfaction of each party.

In both cases — the commercial and non-profit sectors — the closer an organisation can get to the customer’s view of value, the more likely the customer is to be satisfied and to return to that organisation. Organisations cannot always provide exactly what their customers want or even expect.

If this is the case, then it is important for the organisation to manage customers’ expectations so that they will not be disappointed. This obviously honest example of managing expectations comes from an Indian train timetable: ‘The times shown on this timetable are not the times when trains will leave: rather they are the times before which the trains will not leave’. There are many train services in the world that would do well to follow this example!

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