Value Capture
Many organizations find themselves with a diverse customer mix, under fire from low-priced competition and with increasing customer demand for product enhancements or services. This seemingly contrary situation is a challenge for most businesses. Typically, Sales and Marketing attempt to adjust the offering to meet the perceived customer needs (usually increasing product line complexity and level and types of services offered) while Operations attempts to standardize, streamline and simplify to keep costs under control and meet customer service goals. The result is often functional discord and unsatisfied customers.
When a business takes a market-focused approach, that is, looking at the business from the customer back, it nearly always turns out that the customers are very different in the way they buy and in the way they value the products and services they receive. However, few businesses recognize these differences across the organization and, as a result; customers are often served with an offering that is “averaged”. Some customers are under-served and consequently ask for more while some are over-served and may be lost to low-priced competition.
Another common dilemma that companies face is unintentionally not reflecting the full value delivered to, and perceived by, customers in the price. Too often, because of the “averaging” approach, high-value offerings are under-priced. In addition to these missed opportunities, organizations with many transactions typically have a large number of price leaks – where intended revenues are simply lost due to oversight or inappropriate policies.
MFL’s Value Capture approach is structured to help the organization productively address the wide range of issues the business faces in providing the right offering and capturing the value in price. The result of the effort is often transformational for the business. It is not unusual for an organization to find ways to simultaneously:
- Deliver an appropriately
high level of product performance and services to some customers and
get paid for them.
- Surface all of the “extras” that the organization provides
- Communicate the value delivered
- Get paid for benefits delivered
- Develop and deliver new, high-value products and services
- Compete more effectively
for price competitive business using an appropriate offering and cost
structure.
- Strip out product or service “extras” to compete more effectively
- Take a tough minded approach to competing for this business
- Align limited resources with what customers value and are willing to pay for.
- Achieve organizational clarity and efficiency over what to deliver to different kinds of customers
- Identify and close “price
leaks”
