Customer value - LAST Conference Melbourne July 2019
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How does value get exchanged and how can we use our understanding of value to throughout the whole product development cycle, from creation of the company purpose and goals to exchange of value with customers.
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Customer value - LAST Conference Melbourne July 2019
- 2. Customer Value David Williams Jul 2019
- 3. Rolling Start What is your preferred mode of transit and why do you value it? Place answer on Flip Chart and discuss with at least one other person in the room while we wait to start.
- 4. Format for this session • Rolling Start – DONE already! – 5 mins • Introduction – Goals of Session • Definition of Customer Value and Usage Models – 15 mins • Insights group work – 1-2-4-All Liberating Structure – 15 mins • Questions / Comments -5 mins • LIVE Feedback :
- 5. Goals of this session Uncover gaps in our understanding of customer value and how its used Discover new insights about customer value Take home something you can apply in how you use customer value
- 6. What is Value? What is Customer Value? value noun 1. the regard that something is held to deserve; the importance, worth, or usefulness of something. Customer value The difference between what a customer gets from a product, and what he or she has to give in order to get it. Value = Benefit – Cost “a customer perceived preference for and evaluation of those products attributes, attribute performances, and consequences arising from use that facilitate (or block) achieving the customer’s goals and purposes in use situations”. - Robert B Woodruff (1997).
- 7. What is Value? Dude’s Law Value = Why How
- 8. Why should I care about customer value? • Without customers, there is no business • Without getting anything of value, they would not be a customer • Agile Manifesto 1st Principle • Our highest priority is to satisfy the customer through early and continuous delivery of valuable software. • Lean 1st Principle • Value is always defined by the customer’s needs for a specific product. • Domains of Business Agility • Customer is in the middle of the model • Age of Agile – Steve Denning • First law of Agile – The law of the customer “The purpose of a business is to create a customer” – Peter Drucker.
- 9. Direct Value Exchange Indirect Who is the customer? Business / Organisation Customer / Consumer Family / Community Environment
- 10. How is value exchanged? • Trading Customer Value for Business Value Different ways: • Your money for product (e.g. buy a car) • Your time for entertainment inc. ads (e.g. Watching free to air TV) • Your data for service (e.g. Using social media) • Any interaction is an exchange of value (of sorts)
- 11. Personal Values Emotions Needs Wants / Desires Relationship Curiosity Fear / Doubt Product / Service Knowledge Jobs to be done Problems Time Price Social Proof Context Influences on Value Exchange Exchange occurs when the anxiety of pain or gain outweighs allegiance to the status quo
- 12. Purpose / Goals Customer Pool Customer Modelling Assumptions / Hypothesis Experiments Development Trade Insights / Metrics Learnings Owners Delivery Team Strategy Team Operationalising Customer value
- 13. Bet Size ? / Validation Time
- 15. GROUP WORK What is the one question you want answered about value now and why? 1-2-4-ALL Liberating Structure (12 minutes total) • Silent Reflection : Write on post-it (1 minute) • Generate Ideas in Pairs from self reflection (2 minutes) • Share and develop ideas amongst all on table 4-6 people (4 minutes) • Each table to share “What’s the one idea that stood out?” (5 minutes)
- 18. References • Book: Age of Agile – Steve Denning • Domains of Business Agility - Business Agility Institute • Agile Manifesto • Definitions of customer value • Lean principles
Editor's Notes
- Introduce yourself – David Williams, Agile Coach at ANZ House Rules (if not done yet) - Toilets, Emergency Evac Procedure, - Get involved, meet new people and have fun. - Safe space, healthy debate, no personal attacks, separate facts and opinions. Logistics Post-its Flip Chart Sharpies Feedback Poster – Check with speaker handbook – live twitter feedback
- Timing Plan Fill in worksheet about you before we start (3 min, 3 slides) Intro, goals, format (2 min) Partner with someone you don’t know and share answers to about you (or finish if not yet done) (15 min, 6 slides) definitions and models of customer value (5 min) Question one in pairs – interview and summarise in pairs (20 min) Group discussion Lean Coffee Groups 4-8pax) 3 Votes, 5 minute rounds, 4 rounds (5 min) Question 2-3 in pairs (10 min) Group sharing – 2mins per group – 5 groups (5 min) Questions and comments, fill in question 4. (5 min) Finishing slides and thank you. 70 mins total
- Please don’t shoot me! These are just some models/thoughts and ideas from my research so far?
- Here are some definitions of Value and Customer Value. Does this answer all your questions? Are we done? You can go home if you got everything you need!
- Dude’s law was first described by David Husseman. Why is how important is it? How is how hard is it to do? Determining how important it is, is solving for a complicated or complex problem.
- Why am I interested in customer value I was using the term and realised I didn’t really know what it meant Its referred to in the Agile manifesto, Lean, etc. But what does it really mean and how do we use it So I starting researching it…
- Business can sell to one another – supplier / consumer relationships Customer is the one who exchanges value (e.g buys product or service). The consumer uses the product or service, often the same person, but may not be You might say a fair value exchange occurs when both sides are happy with the exchange Note however, what the customer perceives as good, the family/community or environment may not I would think that considering the family/community and environment will likely lead to longer lasting value (more sustainable value) How does this change over time? VUCA (Volatile, Uncertain, Complex, Ambiguous) – Context is constantly changing
- Swapping customer value for business value. Business model determines how business value is monetised. Can be direct (paid for product/service), or indirect (receive data which can then be sold). Can be monetised now or in the future. Value exchanged can be positive or negative? Though negative value is not normally willingly exchanged! Value exchange can accumulate overtime, esp relationship component of value. Every interaction between customer and business is an exchange of value.
- Many influences that cause customer to actually exchange value, or not Price, Problems, Jobs, Product or Service Knowledge, Social Proof, Values, Emotions, Needs, Wants/Desires, Relationship, Curiosity, Fears/Doubt Context is the sum of all these things Context is always changing, some parts fast, some parts more slowly Exchange when anxiety of pain or gain outweighs allegiance to status quo Decision to trade is complex – Applying cynefin model would make sense to run probes to determine how the system will respond. Single Person V Group Modelling customers allows us to find common conditions and characteristics that will likely influence the group. Modelling can use tools such as value propositions, empathy maps, personas, Jobs to be done, VOC, stories, and more (typically domain of product management and designers)
- Explain each box Purpose/Goals > Customer Pool > Customer Modelling > Hypothesis > Experiment > Development > Trade > Feedback Metrics > Learnings Box above constrains the box below (Purpose constrains customer pool, Customer Modelling constrains Hypothesis, Experiments constrain Development etc.) Feedback loops – More than two Customer Value is defined as part of Customer Modelling and Hypothesis Trade is where you test the hypothesis by attempting a value exchange of your latest development with the customer Feedback metrics: Did the customer exchange value? If not why not? Did they pay for it? Did they use it? Did they view it? NPS is indirect measure of value being delivered Learnings is where we analyse the feedback data and then loopback to and earlier step such as Hypothesis, or purpose or some other step. Which team does what? Which team knows what? Who should now what? Use as a diagnostic tool to check for alignment between stages, detail approach within each stage, involvement and awareness of each stage to all teams.
- How big a bet are you willing to make? How much time, money, people do you want to invest in your bet? Validation is the outcome from attempted trades. What is result of your experiment? Did it work out as you expected? Did you learn something? Only three possible outcomes – Success, Learn or Die! If successful then how can you amplify the result If you learn something, what do you need to change for your next experiment If you died, then perhaps your bet was too big! Design experiments that wont kill you.
- Business Value V Customer Value Without customers there is no business Without business there is no product/service for the customers Without employees there is no business Without Suppliers there is no business Without a community there are no customers Without an environment there are no customers or business Who decides how to balance the value being exchanged? How do they decide?
- Love your customers, you need them. Thank you
- Please share your experiences, thoughts and ideas