In any industry, you can’t create value unless you understand what the customer needs—and how to satisfy that need at a price that’s both acceptable to the customer and profitable to the company––all before your competitors beat you to it. That means supply and demand management are crucial.
This formulation works differently in different industries. In the software business, for example, developers often rely on the beta concept—offering only minimally viable products because they have the advantages of rapid speed-to-market and real-time customer feedback. With these inherent attributes, companies can outsource much of the product development and evolution, sharing learnings in the process.
The credit card and payments industry, a commoditized and highly competitive category, operates much differently. Some issuers differentiate their products by building and growing brand equity; others focus on guerrilla tactics to thrive on a small piece of the pie. Either way, the consumer is left to navigate the maze of choice. And unlike the software category, companies in the cards and payments space must focus equally on acquiring and retaining customers while stimulating them to use the product more and more often. That’s where an understanding of customer value comes in.
The Value Management Construct can help. It provides dimensions of value for both demand and supply in support of a given value proposition. In the instance of a credit card, the model looks at four dimensions:
• Price and frequency of use
• Length of relationship
• Costs to acquire and serve
• Share of wallet
Once these variables are derived, the challenge moves to identifying and measuring the attributes for each link in the value chain. From there, companies can develop specific strategies and tactics to optimize, challenge and evolve the dimensions of value over time. Using this model helps ensure product relevance and ongoing customer adoption.
For a better understanding of value management and how it can help you frame your marketing strategies and tactics, call Creative Solutions at 302-543-8533 or email us for a free consultation.