August 21

When we last left off, we had yet to discuss two remaining elements of value proposition - relationship and price - having covered image and service. Let's complete the picture then explore a recent article in Arrive, Amtrak's "in flight" magazine about the value of relationship.

Relationship I was a CIO-for-hire at one client, and the client's only IT employee (who was responsible for ongoing telephone and desk-side support) was astounded at all that people told me on my semi-monthly visits. "Why", he asked me, "do they tell you all these things? They never tell me."

Did he ever walk around and ask how things were going? No. Did he ever call back a day later to see how the last fix went? No. Did he ever sit with them while they worked to see what they really had to go through? No.

He focused on the technical problem, not on them. Our capabilities aside, relationship was a huge distinction in our respective value propositions.

So, what's the value of your relationship with your customers? Do you care about them? Do you walk around and ask them how things are working? Do you listen for what they need?

It's impossible to overestimate the worth of the relationship element of value proposition. Anyone who has watched IBM do business knows they understand this and use it.

Relationship building costs you nothing. Do it.

Price The price is what customers pay for the other three elements of the value proposition - the service and its characteristics and business benefits, the image, and the relationship. Those are, after all, the value received. Price is seemingly the most important, but not as important as total value.

Balance

Ultimately, one chooses from among competing value propositions by trading off among the four elements - service, image, relationship, and price. Most outsourcers compete on low value-low cost commodity value propositions. I recommend that you, as IT leader, consider offering a more distinctive and value-laden value proposition.

Relationship V. Commidity Service

The January/February 2008 edition of Arrive (Amtrak's on-board magazine) published an article about the importance of great service in making your company stand out in a competitive field. In my reading of the article, great service was defined by the strength of the relationship offered to the customer, and I couldn't help but associate it with the relationship element of value proposition.

The author quotes several books by individuals who had sound basis for their belief in service, including: Chocolates on the Pillow Aren't Enough: Reinventing the Customer Service Experience, by Jonathan Tisch, CEO of Loews Hotels and co- chairman of the $18B Loews Corp., and Exceeding Customer Expectations, by Kirk Kazanjian, a case study of Enterprise Rent-A-Car, reportedly the most profitable in their industry.

The key point? It's much easier to lose customers than to find or keep them, and the race to the bottom on commoditized services - like customer support - alienate many.

In contrast, the article mentions Zappos, the largest shoe retailer and one of the most successful e-retailers. Zappos has superb customer service and a loyal customer base. (I gave a copy of this article to a Vice President at a client, and she did attest to truth of that statement.) They refuse to outsource the call center, a commodity these days, because "you can't possibly be as passionate about my products and services as I am".

Back to IT, since we're not selling shoes...

Can you alienate your customers with "faux inspired" or disinterested service? Yes. Lose them? Not the way you think: They'll lose you.

The relationship part of your value proposition matters. It's not everything that contributes to service, but it's a powerful factor. Don't compromise it.

Note: If you're interested in the Arrive article, drop me a note and I'll send you a copy.