Create Value At Every Touch Point
January 13th, 2008 by binnur
I recently had the pleasure of experiencing Apple’s customer service. Think about it, what percentage of the population would actually use pleasure and customer service in the same sentence?
For their customer support and service, Apple has created multiple venues. One of which is their Genius Bar at an Apple Store. Ok, referring to something as ‘genius’ is a little presumptuous, but what are the other options, “Geek Squad?” 
My experience at the Genius Bar for diagnosing/acknowledging my MacBook issue was straightforward. First, you make an appointment online. Second, as soon as you walk in the door, they check you in to your appointment. At the Bar, they have large flat-screen monitors that regularly shows the names and the schedules of customers waiting for service. And if that’s not enough, someone will shout out your name when you get to the top of the list. So, I was in-and-out of the store within 30 minutes.
Since they weren’t able to resolve my issue at the Apple Store (lack of parts), I opted for Apple’s Mail-In Service. What an amazing experience! Less than 24 hours after calling Apple, DHL dropped off my Mail-In Service Box. Over the weekend, I packaged my laptop and called DHL for a pick-up, which went out Monday mid-afternoon. Tuesday morning, I received two emails. First one was the notification that they received my laptop. The second email, which came late in the evening, indicated that my laptop was fixed, shipped and that I should receive it in 2 workdays. Next morning, Wednesday, FedEx dropped off my laptop at 10:30am. In another words, within 2 days of leaving my house, my laptop arrived back at home.
Unfortunately such customer delight stories are rare in the industry. Yet, there are so many opportunities and touch points that are available to create value and competitive differentiation for the firm. Value in this sense refers to the amount the customers are willing to pay for what a firm provides them. A firm/product is profitable if the value it delivers exceeds the cost of developing and delivering the product.
Lets take a look at some of the generic models for examining various touch points for exploiting value for a firm. For a firm that revolves around delivering value to its customers, they will find innovative ways to create value in all aspects of these models.
Porter’s Generic Value Chain
Michael Porter introduced the concept of generic value chain model that describes a sequence of activities that are common to a wide range of firms. As shown in the figure, a value chain includes all the activities a product goes through, which also adds value to the product.
Note that each of the activities in the value chain is also linked. High quality assurance processes during technology development reduces the support/service costs in the field. This is also true from the perspective of procurement, where high quality assurance processes eliminate faulty parts, reducing the costs associated with debugging and maintenance later in the value cycle.
Note that no two firms, even in the same industry, making the same products, have identical value chains. So, how well a firm manages its value chain and its linkages determines the value they deliver and competitive advantage they gain in the industry.
Value Delivery System
Porter’s value chain concept can be extended beyond just an organization to describe the value systems. A value system includes the value chains of all the ecosystem players that collaborates to deliver value to the customers.
Think about the challenges of working with other internal groups in your company, and project it to your ecosystem of partners, suppliers, alliances and all. Don’t forget to factor in the cultural and value differences as well as conflicting priorities and goals. However, a firm’s position in this value delivery system will again differentiate it from the rest of the pack.
Customer Life Cycle
Customer life cycle describes the steps a customer goes through when selecting, purchasing, using, and all the way through disposing of a product or a service. As simple as it sounds, getting a potential customer’s attention in these days is quite a challenge. Given the availability of competing options and transparency of product information/reviews, firms need to pay extra attention to capturing the potential customers and turning them into paying and loyal customers.
Recently my husband discovered that Office Depot offers pre-paid electronics recycling boxes. You buy an empty box at the store (small, medium or large), fill it with old electronic devices, then bring it back to the store for environmentally friendly disposal. This service is certainly unusual, but for an eco-friendly person with too many old electronic gadgets and gizmos, it is certainly something worthy of TWO 40-minute drives.
Technorati Tags: value creation, Porter’s value chain, customer life cycle
A Lean Thinking approach to services is another “model for examining various touch points for exploiting value for a firm”. As I’m sure you well know, the Lean methodology has been applied most within the manufacturing sector but is continuing to make inroads into the service sector.
One of the most recent definitions of Lean Thinking is that advanced by Murman et al. in 2002 from work carried out at MIT’s Lean Aerospace Initiative (LIT):
“Lean Thinking is the dynamic, knowledge-driven, and customer-focused process through which all people in a defined enterprise continuously eliminate waste with the goal of creating value.”
Minimising waste requires:
1. Defining Value - the customer defines value
2. Identify the Value Stream - what processes add value
3. Flow the Product - Eliminate waste as the product/service flows through the processes
4. Pull - Produce in response to the real demand
5. Strive for Perfection - Continuously improve
Binnur,
Excellent comments about the Porter methodology, especially clarifying the difference between his value chain and value system concepts, which most people confuse.
Your example about Apple service is an interesting one because the same events you experienced could be used to demonstrate the opposite, depending upon one’s expectations. Specifically, should a customer not expect Apple’s holistic value system to predict, coordinate and maintain sufficient parts inventory at the Apple Store?
I think it’s like the glass half-full or half-empty viewpoint on customer service.
Again, great piece on Porter (who had another great article in this month’s Harvard Business Review).
Cheers,
Alan S. Michaels
Co-founder http://www.eCompetitors.com
Binnur,
Love your post. A key to Apple’s success is that it CONSISTENTLY delivers positive Touchpoints across its customer lifecycle. As good as this experience was, if your other Touchpoints with Apple were not positive, it would impact your relationship with the Apple brand.
While your customer lifecycle is useful to many organizations, I suggest a Customer Relationship Lifecycle that is more ubiquitous. This model is about the relationship with the customer and is applicable to every organization and its targets with time the only variable (you will go through the stages faster buying a can of soup than a car or house). The stages of the relationship lifecycle are: Awareness, Knowledge, Consideration, Selection, Satisfaction, Loyalty, Advocacy.
A key is consistent delivery of Touchpoints across all stages of the relationship lifecycle. By consistency, I am referring to quality (meeting customer needs), delivery (mark/look/feel delivery and similar experiences with similar Touchpoints), message (Touchpoints are consistent with marcom messages regarding experiences), and image (e.g. the image of each of Tiffany’s Touchpoints will be consistent with its luxury brand image).
I suggest that delivering consistency at every Touchpoint along the customer relationship lifecycle is delivering value.
Hank Brigman
hbrigman@TouchpointGuru.com
Alan,
Thank you. Your point is well taken regarding Apple’s service and parts inventory. The fact that the Apple store did not have the necessary parts in inventory was a surprise. My issue was specific, I had spent the time on the phone talking to Apple support and got redirected to the Apple Store for next steps in problem validation. With that, they should be able to validate all the parts and expertise is available in the store before scheduling the appointment. Yet, in this case it wasn’t done. However, going back to glass half-full (call me Pollyanna :)), if you have an HP system, what do you do? Though, this maybe a future blog on looking at closed vs. open systems.
Also, thank you for pointing to the latest Porter article on HBR. “The Five Competitive Forces That Shape Strategy” is freely viewable at the HRB’s January 2008 site.
–B
Hank,
Thank you for pointing to the Customer Relationship Lifecycle. Your comment regarding the importance of consistency in delivery is a notable one. Though I am a happy Apple customer, there are things about the company I don’t enjoy, such as when there is a known software quality issue with a product they don’t quite own up to it. As much as I don’t like some of these qualities, I have learned to accept and appreciate Apple for the value they deliver. In a way, that is a definition of loyalty.
–B
John,
Thank you for the reminder on Lean Thinking. I am a big fan of Agile methodologies, which has been heavily influenced by Lean Thinking. Though I haven’t talked much about Agile, it was one of my initial posts. Lean Product Development has been making inroads in the software industry. In future blogs, I’ll plan to incorporate more aspects of Lean Thinking. In the mean time, I definitely look forward to sharing more of your inputs and insights with the KiteTail readers. Thank you.
–B
Binnur,
To a degree, acceptance of consistency is relative to the competitive environment. You somewhat accept Apple’s transgressions perhaps because the alternatives in their industry don’t do a better customer experience job.
However, I believe that we are starting to step outside of industry silos when evaluating customer service. If airline X’s customer experiences can be consistently positive, why can’t retailer Y’s?
We are in the early battles of the customer experience war. A war where I believe that ultimately the customer will be the winner.
Hank Brigman
hbrigman@touchpointguru.com
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