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Customer Value Journey in Circular Economy

The circular economy (CE) focuses on keeping materials in use for as long as possible and also to preserve, or even upgrade, their value by creating added value through services and smart solutions. To succeed in this, instead of selling products, companies should move to retain ownership and sell their solutions as a service. Yet, mainstream consumers are still used to owning many products, such as tools, clothes, furniture, and domestic appliances. To attract consumers to choose a service instead of product ownership, the service offering needs to provide superior value. We explored the customer value journey regarding a tool rental service called Liiteri. On the journey the benefits were related to, for example, better quality and no need for storage and maintenance. On the other hand, the sacrifices were realised in the pick-up and return steps, which were regarded as more laborious if the tool was rented.

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Customer Value Journey in Circular Economy

  1. 1. 120.6.2017 Maria Antikainen Creating value for consumers in CE - Tools as a service Maria Antikainen*, VTT Technical Research Centre of Finland Minna Lammi, University of Helsinki, Consumer Society Research Centre Harri Paloheimo, CoReorient Ltd @AarreResearch
  2. 2. 220.6.2017 Maria Antikainen Circular economy transforms business Technology as an enabler and accelerator The circular economy (CE) is based on: • Zero waste • Keeping materials in use as long as possible • Preserving or even upgrading value by creating added value through services and smart solutions • Consumers play central role
  3. 3. 320.6.2017 Maria Antikainen From owning to renting § Encourages companies to extend the life-cycle of products by repairing, reusing and remanufacturing products. (Tukker and Tischner 2006). § Companies strive after efficient use of products, leading to cost and material efficiency in production processes (Tukker and Tischner 2006). § Consumers need to have a new CE- positive mindset and are also willing to change their everyday practices (Mylan 2015).
  4. 4. 420.6.2017 Maria Antikainen How value is constructed and delivered in the CE? § RQ: How does a tool rental service create value for consumers and how could it deliver more value than ownership of such tools? § A framework based on the theories of customer value, service design, and customer experience.
  5. 5. 520.6.2017 Maria Antikainen Customer value Benefits • Service quality • Strategic benefits • Economic benefits • Practical benefits • Personal benefits • Emotional benefits Sacrifices • Monetary sacrifices • Non- monetary sacrifices e.g. time effort, perceived risk Customer value in CE Customer value: a trade-off between benefits and sacrifices that customers perceive when they purchase and use a service (Eggert and Ulaga 2002; Lindgreen and Wynstra 2005; Ravald and Grönroos 1996) Customers’ roles in value co- creation are central (Vargo and Lusch 2004).
  6. 6. 620.6.2017 Maria Antikainen The customer journey map (CJM) § To evaluate and formulate the customer experience especially in the service design field (Bucolo & Matthews 2011; Johnston & Kong 2011). § Businesses are using this tool to map problems in services but also finding new ways to run existing services (Holmlid & Evenson 2008). § Taking a larger perspective on aspects of the customer experience. The idea is that it illustrates points of contact where the consumer is in contact with either products or services (Alves et al. 2012). COMPARISON AND PLANNING BOOKING AND PAYMENT PICKUP OR DELIVERY USE RETURN
  7. 7. 720.6.2017 Maria Antikainen Renting or owning? Renting good option when there is not much use Products with close relationships-> owning Some factors more temporary some more permanent Renting more expensive products Service portfolio (product, user- and result-oriented)
  8. 8. 820.6.2017 Maria Antikainen20/06/2017 8 Liiteri customer value journey map Æ Cheap price when not used often Æ No need to buy Æ Testing without risks Æ Tools are in the right place (not at cottage) Æ No need for maintenance Æ Good quality and condition Æ No need for storage Æ Environmental benefits − High price when regularly used − Not instant availability − Pickup is laborious − Not sure about the condition − Difficult to use unfamiliar products − Maybe lacking some additional things needed − Return is laborious COMPARISON AND PLANNING BOOKING AND PAYMENT PICKUP OR DELIVERY USE RETURN BENEFITS SACRIFICES
  9. 9. 920.6.2017 Maria Antikainen Conclusions § Understanding crucial elements to customer satisfaction § How value is created and delivered during journey § a method for organising and analysing results and attributes acquired from service use § tool for planning and improving § Next steps § Prioritising identified issues, thus making the framework applicable to start-ups utilising lean and agile development. § Qualitative and quantitative data from the same context, as well as expand the research to include other types of novel CE services
  10. 10. 1020.6.2017 Maria Antikainen Thank you! @AarreResearch