Importance of customer value Essay
Importance of customer value
Building and preserving customer value is essential in the new organizational structure taking place in the health-care industry. As businesses and consumers move forward, businesses are being measured more and more by the value they create for their customers. Customer value is the focus of the article “Customer Value & Business Success in the 21st Century.” Customer value is defined as how a business values customers and how customers value a business’s products or services.
The article focuses on health-care organizations, and how there is an expectant trend that individuals will absorb a greater share of their own health care costs. In order for health care organizations to respond to this growing trend toward consumerism, customer value applications must be implemented in daily business activities. The author describes four critical processes and areas that should be of focus in order to build success. The first is to successfully identify what your customers need and expect. The second process is to build service delivery models to meet each target segment. The third area is to understand your customers enough to anticipate customer expectations in order to meet these expectations. The final process is to commit the organization to customer-centered strategic marketing and communications.
In today’s unstable market, the only businesses experiencing success are those that are able to meet and exceed expectations of customers. It is essential in today’s fast-paced business to develop quality relationships with customers which results in customer loyalty. The traditional way of pushing the product or service down to the customer is being replaced by tailoring business decisions to meet customer expectations.
The delivery of health care is changing to consumer centered health care where each customer is an individual with unique needs and expectations. Consumer centered health care requires altering or creating new products and services to meet needs and expectations. It is also necessary for a health care organization to understand the lifetime value of a customer. The customer is not seen as a one time transaction, but as an ongoing customer receiving continuous service over time. The author states that it should be a goal to capture the share of the household’s total healthcare over a long period of time.
The term customer satisfaction is being replaced by customer value. Achieving customer satisfaction is only the beginning, and building customer loyalty and value are necessary for sustainable growth in the business world today. Unlike traditional ways of conducting business, the new order is primarily focused on meeting individualistic needs of each customer. In order to achieve this goal, an organization must go through a series of steps. This involves understanding what customers value most, meeting and exceeding their expectations, developing services to meet these expectations, and refining services and products through feedback. Grouping by customer needs, market-based segmentation has been far more successful than the traditional method of grouping demographics.
Organizations today could highly benefit from market-based segmentation. One significant reason is that reducing customer defection rates could dramatically increase profits. Studies also show that a longer a customer stays with an organization, the more profitable they become. A recent study reporting reasons why customers leave an organization showed that 68% of those surveyed left due to an indifferent employee. It is essential and very necessary to have satisfied employees in order to be an organization that creates value for its customers. Satisfied employees are loyal employees, and loyal employees usually deliver excellent service. Excellent service results in customer satisfaction and loyalty which results in customer value, and higher profits for the organization.
Many organizations have only one service model and this result in mediocre service. After understanding customers’ needs and expectations, service models can be developed for each market segment. Grouping by needs and expectations will allow an organization to establish relationship with customers by specifically tailoring services to each segment. Development of these service models will increase customer loyalty that will also increase profits and revenue.
Customer value puts the customer in the center of each process of expectation audits (understanding the customer), service models (niche customization), service innovation (understanding customer expectations), and strategic communication (communicating with customers).