I really appreciate your efforts and keen to associate in your noble cause... Please suggest what can I do in Mumbai. I have lots of unique ideas and I fascinated to change all unorganised hawkers and roadside seller in proper organised market and create respectable position of them in society and involvement and direct participation in economic growth of our country.

I really liked your Value Co-Creation Model shown below! Well done.

Hi Gautam, Comparing and contrasting TQM and CVM is fascinating and I couldn�t resist jotting down some thoughts. I don�t know whether they add to the debate, but they may prompt some discussion � TQM and CVM relate to customer outcomes from completely opposite directions � like looking down opposite ends of a telescope. TQM is about intrinsic value in a product dominant logic. CVM is about extrinsic value in a service dominant logic. You state that, �The Quality Revolution was meant to be customer focused, instead became process centric and one of record keeping.� But, as I see it, TQM always was an internally focused, process-based initiative. It had to be. The Quality movement was very much a part of the Product Era dominated by the value in exchange model. In that context, it made absolute sense that, if you improved the quality/reliability of manufactured goods, the customer would benefit. However, the primary driver was competitive productivity. This is borne out by the example of Japan. At the end of the Second World War, America�s productivity was 9 or 10 times greater than that of Japan. This prompted Toyoda Kuchiro, president of Toyota Motor Company, to say in 1945 that they must �Catch up with America in three years. Otherwise the automobile industry of Japan will not survive.� This kick-started Taiichi Ohno on development of the Toyota Production System, and gave rise to his famous statement: ��All we are doing is looking at the time line, from the moment the customer gives us an order to the point when we collect the cash. And we are reducing that time line by removing the non-value-added wastes.� (Toyota Production System: beyond large-scale production, Taiichi Ohno, 1978) This was classic Product Era value creation, and something that generations of employees have worked very hard and �gone beyond� to deliver. (So it�s not a matter of employees �going beyond� � a lot of them have always done that. The important bit is where and how they focus their energy.) The Quality Movement operated on the assumption that internally driven manufacturing process improvements would ultimately benefit Customers by improving competitiveness, but was driven by an internal focus on competitive advantage. That�s obviously not the same as being Customer-focused or pursuing Customer Value. And it was always, axiomatically, a process-centric activity. I think the Quality Movement was a great success of the second half of the 20th century. (And it carries on via Agile methods etc. etc.) In fact, thanks also to huge help from computing technology, a lot of the quality issues in manufacturing have now been solved. (Old joke: �How many people does it take to operate an automobile factory?� �One man and a fierce dog.� �What�s the fierce dog for?� �To stop the man touching anything.�) Back in the 20th century you had to choose between quantity or quality. You could have one but not both. Now you must have both. So the two functions differ as follows: � Quality Management is about the intrinsic value in a product or service. � Customer Value Management is about the extrinsic value in a Customer outcome.** ** A Customer outcome is NOT �About �us�. I.e. NOT products/services or their attributes, features, advantages, differentiators; not our plans, resources, assets, capabilities, processes, functions, reputation or descriptions of excellence.� (Michael J. Lanning, Delivering Profitable Value (1998)) The more than $64,000 Question is, how can we assure an understanding of the outcomes required by Customers and Prospects, and then deliver those outcomes?

Dear Mahajan Ji, I have encountered many post purchase negative experiences. Most relate to unfair 'supplier convenience' policies and practices. The worst one is the need to retain an invoice throughout the warranty period and produce it when something goes wrong. In this day and age, product serial number should be sufficient and the manufacturer should retain date of sale information. Many companies are bringing to do so - thankfully. Companies are looking at single transaction profit when creating their post purchase customer handling policies. They need to look at the life time value of customers. When they do so they will treat customers better and deal with failures with alacrity.

Great Article.

Dear Mr. Mahajan, It�s been a pleasure meeting you speak at IIM Lucknow (Noida Campus). I would like to share that I enjoyed our academic interaction and sincerely hope that we can get together again in the near future.

This is such a large topic that it could fill a book, not just an email. For starters, zero defects always meant making a product that wouldn't fail. Nobody ever asked, "at what price?". And, would a customer buy a product that would last longer than he would?? ? It is also said that quality products come from quality parts. Although I agree with this, again, at what price? The solution is to focus on the customer. 1) Listen to what he wants, 2) give it to him. It's that simple.? I believe "Customer is What the Customer Says It Is". In some cases, this means if he needs a product to last just one time, you sell him a product that lasts just one time. The product may have little quality but it does the job which is what the customer wants.? The other side of this coin is "the customer is not always right". Sometimes he wants to buy something but you know it will either not do the job or is more than he needs to do the job. Do not sell something that will not do the job. I can give you examples of all the above but I'm trying to keep this short.

Excellent idea, Gautam! The first thing to do, as we do in quality management, is to define "customer value." Perhaps, you have a definition and I am not aware. Having lived and travelled in several countries, I find it interesting that western societies (Europe and North America) are more customer focused than eastern societies (Asis-Pacific, except Japan and South Korea). Also, I find that western countries/culture is more trusting of people in general, while Indian culture is the least trusting of people. I find that in India most businesses are transaction oriented, not focused on customers or long term prospects but on a quick buck! Most businesses are customer focused in the U.S. Therefore, I think the definition of "customer value" will be influenced/colored by the culture. This is not meant as criticism but meant as simply observation. While the quality can be defined in quantitative terms, customer value is more qualitative. Also, as the grade of quality varies, i.e. Hyundai cars vs Mercedes cars, or Holiday Inn vs Sheraton or Hilton, customer value may also vary. Well, that's all for now.

The more I read my new partner in progress� book on Value Creation and realize how this simple, yet powerful concept is overlooked by a majority, yet how it delivers the ultimate value including revenue growth � something eluding most, I am excited to combine my high impact experience with this with the world�s leading author on the topic Gautam Mahajan.

I admire what you are doing for Customer Value Creation. All human endeavor, to be successful, should be based on this one agenda. Thanks for the article by Prof. Kumar and Prof. Reinartz. Its superb!

For every item one buys, there is a range of prices, below which, you get nothing worth having and, above which, you get no more than what you would have received at the lower price. One example is single edge razor blades with no cutting edge for $.02 ea or masking tape for $.10 ea with no adhesive. I have bought both for customers who insisted I they would pay no more. Of course, they were rejected and I had the problem of making my suppliers accept the return. It would have been better to tell my customer I couldn't match the price. Another "problem" occurs when you put a vendor out of business when he sells you a product too cheap to stay in business. Try making your manager understand you can't find another vendor that stupid and now you have to buy from someone who charges more for that item. Lastly, I once had a printer tell me he didn't intend to make anything on my order, he just wanted to keep his people employed and his machines running. I told him, "I don't want to hear that. What are you going to do when you have a choice between running my order or running an order that you will make a profit?" By letting him make a profit, I got my stuff and on time. This was a financial company. Our "production" stopped if we ran out of printed forms and envelopes. There was a time when the top managers came from the Accounting Dept. Hopefully, those days are over.

I enjoyed this article and yes sales people should be part of the value chain but it takes courage sometimes. I posted it on LinkedIn and Twitter.

Wow - great new word too Gautam - Customeric!

Thanks for highly useful information.

This is excellent. Very well written, very true and important.

Thanks for very useful information. Kindly, continue in future also.

Extremely well said, I agree. Thanks

Dear Gautam Ji, I really enjoyed your article. So typical of what is happening around us. Slips show up all the time - and my experience with IDEA, Airtel and Honda Service are similar to yours. I firmly believe that the actions and behaviours of front-line sales and service staff are a product of the company's internalized core values and culture. Unless the organization develops the right values and culture statements and then the CEO leads in following these, and rewards those who follow the professed values and culture, no amount of training or other effort will help enough. SouthWest Airlines is a great example of how they spread their wonderful values and culture and grew+ exponentially as a result of the happy employees and happier customers. This is part of my Value Focused Organizational Excellence model. A few slides form my one day seminar for this are attached as five pdf frames. I request you to please have a look. Wishing you all the very best,

I'd like to add a counterpoint to some of your thoughts and those in the book. For me, companies like Apple are very easy to speak to - I simply click on a link on their webpage and they ask if I'd like an immediate ring back, or to book an appointment at a time that suits me. Perfect - I don't incur a call charge, but they contact me on any channel and/or time I prefer. What's not to like? I'm 50 years old - certainly not a Millennial! But I'm very familiar with the appalling customer service of telecom companies (whose business it is to connect people!) - endless on-holds, un-empowered webchat people who simply waste your time and theirs. How about banks, who try to smother you with code of conduct reasons for being so bland and risk-averse? Parcel deliveries? Here in the UK, we use DPD, who give you live tracking of where your parcel is on the van, to within 15 mins accuracy, as well as a 1 hour guarantee window. My takeout: there are companies out there who have been steadily pushing the boundaries on finding an efficient, semi-automated way of offering you a connection that works both for them and you the customer. The more that achieve this, the better.

Athletic shoe colors, this is a combination of subliminal influence by manufacturers (Nike neon yellow) and simply bowing to consumer trends for brighter hues, in part shaped by manufacturers' relationships with professional sports stars. Re. service components of value, such as delivery communication, some companies will "go the extra mile" and enable the customer to track package arrival down to the day and hour. Other companies don't realize that basic convenience elements of value have an emotional subtext, so they simply don't make much of an effort to be proactive.

This is nothing more than economic manipulation; it has been going on since the industrial revolution albeit in a more subtle form. This change however demonstrates a fundamental shift in attitude towards customers. It is now naked contemptuousness. The subtexts of the actions from these companies are: - do as we say or buy elsewhere - we (the company entity) matter more than you (the punter) - we are so big, that what we do today everyone else does tomorrow. Get over it. - we matter more than the market as we make the market Why now? In my view because today�s generation have had their natural empathy suppressed so they feel no sense of outrage at such an attitude or approach. Us oldies have well developed empathy so feel compassion and injustice at the utter lack of consideration exhibited. We however, do not count� Get over it or buy elsewhere�

Awesome observations. I almost took things for granted till I read your mail. At GrowBrands Worldwide, we are busy building India's Largest Startup consulting and Incubation company. Over of our client is Govardhan Eco Village, Wellness Destination where a lot of world's best minds are coming to converge on various programs and courses on wellness for body, mind and soul. I wanna drive your attention to am opportunity that exists in this discs for your forthcoming programs and workshops in India. Would love to be of any service to you next. Let me know.

An interesting question Gautam. My particular perspective is to explore not the high level reasons why but the genuine root causes. Everything stems from one or two root causes as in an inverted pyramid. Therefor it is my belief that we must look at the humanitarian reasons not simply the actions. �Actions� are a manifestation of the initial emotional drivers; they are what we �think� we need to �do� to satisfy our emotional needs. Of course this is all subconscious. My experience is that, no matter the situation, when people have genuine choice, so easy to write but very complex to define, they act with empathy, integrity and compassion for their fellow man. Despite many tomes to the contrary man is not selfish. The simple fact of the matter is that he cannot be as to be an isolationist would not perpetuate the species. We are fundamentally tribal. We fundamentally rely upon our fellow man for our own survival because we all excel at different things. Tribalism is the ultimate 1+1=3 scenario. When you begin to examine the critical question Why? it turns out that even when you are a CEO of fortune 500 company, your day is still as full of trepidation as the lowest rank in your organisation. Just because you take home 100 times their pay, does not mean you escape one single jot of the same stress. As the lowest ranked person is frightened of what edict comes down from above, the CEO is petrified too of what comes down from the avaricious shareholders. However, the demands of shareholders are not hide bound by regulation and HR law; they simply hold out their buckets and demand they be filled to overflowing with cash � NOW! It is in light of this pressure that we see the behaviours described. It is purely and simply survival, purely and simply a need to keep a roof over one�s head that drives this. Take away those pressures and you take away the majority of the dishonesty and screw you attitude. I guess that means we are stuck with it until we can install a measure of success that is not directly related to financial performance � watch this space�

Here are my views.... Satisfaction is the reason why people buy: Nope, CSAT like emotion is a prototypical word. People buy based on the value they seek. I concur. The only difference would be, 'satisfaction is a necessary condition'. I would add, the avoidance of dissatisfaction. But it still begs about what. I also don't think people evaluate after each purchase 'to what extent was I satisfied'. So I agree a necessary condition but not a consciously espoused one or one that has a linear relationship to value. High Value products have low satisfaction: I concur with you. Low Value products have high satisfaction: I concur with you. Although price is part of the value equation. Great value so highly priced, don't want it. Satisfaction measures Customer Value: I dont believe the top two boxes should be measured: data is curvilinear and an 8 out of data can be a good result. I also don't believe in transactional measures like this as they can be myopic i.e., the transaction may not be salient to the customer even though you forced an answer. What is salient may be not captured in a transactional survey but still be relevant in the decision moment i.e., other facts outside the immediate transaction such as Apple brand good. Which is why I prefer: capture 'customer story' obliquely about the experience of interest. Value means Benefits: I concur on benefits. Not sure I would compare to other competitive offers all the time. Customer Value is newer than Customer Experience: CX is from the 1990s with Pine and Gilmour. CX is the 'experience the customer has': what is an experience is what delivers utility to the customer. CX defines what is valuable. NPS is a great measure of what the Customer perceives: no it is no different from CSAT.Perception is a complex construct hence my preference from multi-methods that are less dependent on assuming we are evaluative cost -benefit calculators i.e., sensemaker, immersion. Why are these misconceptions propagated and misunderstood? My take is that most people tend to follow what they are told, rather than delving deeply into the actual meaning of, and truly understand how these concepts should be used. These concepts are used and understood loosely. People need to earn a living and there is some utility in everything. Its fine to say do CX or Customer Value but it has to be executed. One reason why companies and executives are not truly becoming Customer�centric is that such loosely used and understood terms confuse companies, and do not give the Customer true insight into what will really help. Thus just measuring NPS and stating that it tells the company what to do is misleading, and will prevent the Customer from truly improving. NPS gives false hope, it exaggerates minor changes and makes people feel they are being successful. Its a scam, in my humble opinion. But a useful one.

A nice CRISP summary

Nice one, Gautam! Thanks for sharing.

I have been reading CVF articles on a range of relevant topics. Appreciate if you could educate me on how I can contribute to your objectives with mutual synergy.

Great post sir , clearing the popular misconceptions

Great

Still the best way, and probably will always be the best way to have customers engage with customers and explain what they appreciate in their relationship with you. Too bad that this is mostly not enough to building your corporate with, therefore it is always wise to enable this through certain events/occasions where they can interact. I call that c2pc customer to potential customer.

Great Post!

Great Post!

Great Post!

Great Post!

Awesome post by our great global leader Most Respected Sir Gautam Mahajan. I am so hungry for next plate of your healthy food.

C@C is the only solution

Hello Gautam, Greetings. Hope you're doing great.

Great Post!

Great Post!

Means shared, Thank you.

Great post!

Thanks

I found this concept interesting and a few thoughts and clarifications I had were 1) What is unique about C2C interaction through C2C portals as compared to channels available for sharing feedback with Product / service providers directly and through social channels available? In fact brands could be made or marred in social world 2) Should the employees have a say in the C2C portal. I believe yes. I believe customer centric culture and a consistency to walk the talk should be way of life from entry level person to CEO. I inherently believe there will be conflicts specifically when economic down turn happens and ability to deliver same value at a more optimal costs becomes important. 3) Since most of us play a dual role in life - as an employee delivering a service or product as well as a customer where roles are switched - should the C2C portal be able to track and report consistent behaviors when roles are switched. Individuals or workgroups deliver at the same intensity and value as they expect from their service providers. This becomes a true test and I believe even if do it right 9 times out of 10, we would be creating an excellent experience for the customer and build trust so that relationship matures.

To me, loyalty is the propensity of a customer to continue to do business with a company. So, if I buy "Apple" I will continue to buy from Apple as long as I receive approximately the same or greater value than if I would buy from a competitor. If I am in the market for an electronic product and Apple offers "significantly" less value than Samsung then Samsung earns my money. However, Value is what is perceived by the buyer and I may feel that the Samsung phone is technically superior to Apple but its App Store has a much better selection, or I am a frequent FaceTime user then I buy Apple. If Value is measured relative to alternatives then Loyalty is a measure of the incremental value.

Like other newly-popularized marketing words (e.g. love!), loyalty has suffered from overuse, and become trivialized. Rarely, if ever, have I observed unbreakable customer loyalty. Weird, because loyalty connotes unswerving commitment. But most marketers would agree that there are boundaries or limits to customer loyalty. So is loyalty the right word when describing customer relationship nirvana? I think it's the wrong word. But the one that I prefer, inelastic demand, doesn't fit cleanly either, and above all, it isn't catchy! (Who would be so idiotic to set up an inelastic demand program?) I don't know when loyalty became commonplace in customer relation dialogs, but I looked in my 100-year-old book, Salesmanship and Business Efficiency as I often do when I seek insight on how selling ideas have evolved. Interestingly, Loyalty appears in the index, and is mentioned on two pages (out of nearly 400). But the author, James Knox Polk, would probably be laughed out a training session today if he attempted to advance his definition. "Loyalty defined: Loyalty consists in giving faithful allegiance to your employer. It demands whole-hearted, untiring service to the concern that furnishes you with bread and butter. It involves doing everything within your power to evolve some new idea or improved method that will in some way advance the interests of your concern. Every wise manager is eager to obtain help of this kind. He is also on the alert to promote any employee who renders such service." After reading this, I also had to check whether passive-aggressive was mentioned anywhere in this book. It wasn't. And nowhere in this two-page mini-essay about loyalty is there a shred of similar bombast about customer loyalty. For me, a vendor-customer relationship that fully deserves the loyalty attribution is when mutual commitments remain stable even in situations when logic and good business sense dictate otherwise. This can and does occur. I've worked with many companies who tolerate mighty supplier deficiencies because of the vendor's rock-solid record on bailing them out of horrendous problems. But because loyalty has become so trivialized today, the issue I often see is that vendors aspire to having that coveted status, but they are too driven by "the numbers," they are motivated only by short-term profits, and they don't want to expend the effort.

As others have described, an excellent article Gautam. I personally do not believe that loyalty is a myth in totality - it is often difficult to create the link between loyalty and commercial value though. My latest blog post is a good example of how brands create loyalty and how they completely lose it - you may be interested in having a read as essentially, I also believe that emotional engagement plays a huge part

This is a very insightful article. It is trying to address the fundamental question which a lot of companies are grappling with. Thank you.

ndeed, for B2B, loyalty exists less because what companies are really look for is value/differentiation provided by the other party. Sometimes, companies incorrectly believe there is loyalty from the customers but the situation could be because the companies are enjoying a situation of lack of or no alternatives/competitions. I would say for B2C, there is a lot of emotional attachment based on purchase/usage experience as you mentioned about familiarity which drives the sense of preference in consumers� next purchase which typically is perceived as �loyalty�. In B2B, many big organization are structured in a way that the purchasing decision is performed by the people whom do not use the products or services directly but rely on feedback of users and hence less emotional attachment is involved. As pointed out by your article, it is important to focus on the �value� aspect that leads to �loyalty� or not focus on �loyalty� as a starting point (e.g. loyalty program).

Great post and thought provoking too.

Very True...

Thank you for a very interesting post and sharing your valuable perspectives on Company loyalty in relation to stakeholders. My thoughts are as follows.

1. Business entity exists with a primary objective of creating wealth for their investors. This is through a strategy that focuses on business growth as well as managing organization efficiently.

2. For achieving growth, customer focus would be centricity is the key. Customer value creation and customer satisfaction becomes the key. Here a question opens up as organizations scale - Should they have the same level of loyalty to their initial customers or their new customers. This question does not have a simple answer and it depends on which customers could provide impetus for future growth objectives.

A simple example here is concept of exclusive services in Banks for HNI.

3. Who is core stakeholder that would support the objectives of growth, margins and customer satisfaction? Employees. Employees first by Vineet Nayar brings in a set of perspectives. In my own organization, employees in customer facing roles are empowered to make decisions that are right for the customer. One way to look at the loyalty of the company to the employees is those who leverage the empowerment provided to create value for customer and help organization meet its objectives (mutual win-win) would see a higher loyalty.

4. Today a delivery of service or product involves a eco-system of suppliers who work with an organization to deliver value to the customer. This means supplier - organization has to create a working model that is beneficial to both. Loyalty both ways provides commitments are honored and trust in relationship exists.

5. The organization or business entity does not exist in Silos. They are part of society. The concept of loyalty in this context is complex. An example is pollution levels in some of largest cities in world. Should business entities in automobile, energy, and manufacturing adhere to a standard higher than the norms to reduce the pollution and when an inflection point is reached should these entities take a conscious decision to scale their growth in smaller cities that have necessary facilities and there by create inclusive growth.

It also throws up a question of what is the consumption limit that is an inflection point and that impacts human beings significantly in the future.

6. The concept of lock-in where switching providers is difficult and cost of switching is high could result in forced loyalty between customers and providers. As technology helps in disruption and brings down the cost of switching this could change.

Useful subject for debate/discussion in a business school amphitheater! 

I am very pessimistic for the outcome when it comes to reality unless, of course, there is profit at the end of instituting loyalty (to any entity)

On question of company loyalty, below are my views.

Most large companies that have a good business model have to be loyal to all of their stake holders. The customer comes first, if customer is not happy, business will eventually fail, Next come employees, if employees are not happy, productive and innovative, product/service quality will suffer and drive customer to other pastures. Then come shareholders. If the previous 2 are taken care of, the business performance will be good, demand will be good, company reputation will be strong, and that will show up in company's economic performance and return on shareholders' investment. That will make the shareholders happy.

Really progressive companies also strive to create a good relationship with local national and international governments and communities where they are located. That creates a good will that will help in getting more customers and also help with recruitment of best talent.

A very apt and relevant article. Thanks for sharing.

Gone are the days when customers were loyal to companies and brands (the likes of Colgate, Lifebuoy etc.)

In the new evolutionary curve fast developing, companies and brands will need to be loyal to customers not just for their survival but for them to realise sustainable growth.

Every touch point wherein the customer engages with the company/brand will need to not just meet but surpass customer value expectations.

Whilst technology is a great enabler for businesses, companies would need to revisit the technology dependent interface with customers via IVR'S, recordings etc. and assess whether lack of a human element in the interaction process can provide a "value" enhancing experience or will leave the customer feeling irritated and let down.

I truly enjoyed your perspective about company being Loyal. 

As customer are spoiled with choices, and moving from a King to God, every company need to be customer centric to survive in this competitive world. Employees, Suppliers, Partners & stake holders should complement the company to deliver maximum value to the customer, those are the companies who wins in the current market.