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Thursday, March 20, 2014

Business Propositions and Customer Experience Create the Service Concept



The business proposition and the customer’s perception of that proposition create the service concept. It is a mutual and shared understanding taking into consideration both vantage points that blend into a total picture. What the company is offering (business proposition) may be perceived differently than what the customer experiences (customer perception of service). The two perspectives create a true service concept.

As an example, a restaurant may offer a friendly environment with high quality food at an affordable price. The customer frequents the restaurant and experiences rudeness by the staff with mediocre quality food at an affordable price. The business proposition and customer perception do not match and this leads to dissatisfaction and lost future business.

Perhaps there were some recent changes in the business? Due to slow sales and lackluster profits the restaurant decided to reduce dish quality and keep the price at previous levels. They have also cut back on training and are pushing their workers harder in an effort to return to profitability. They have unintentionally changed the nature of their business and may need to rethink their strategy and business propositions if they continue to lose customers.

Before one can truly rethink their business offerings it is necessary to delve into the nature of what they are truly offering customers within the market and how to improve upon those offerings. For example, the atmosphere may be more important than the quality. Likewise, the way the food is prepared and displayed may be more important to customer perception than the actual quality.

Understanding precisely what your customers want is important for maintaining a stronger shared concept of your business. Value propositions are not simply a list of benefits but THE few reasons why customers would choose your business over any competitor. Collaborating with industry stakeholders can help in finding more value in the business’s main business propositions (Anderson, et. al. 2006).

The service concept is simply just a mental picture of what the organization is offering.  It can be defined in a dictionary as “an idea of something formed by mentally combining all its characteristics or particulars”(1). This means that both the customer perception and business proposition are subjective by nature and are enhanced through adjusting the strategies and offerings to change the association of images (concept). 

Business propositions are enhanced by aligning organizational resources to root value that is in turn sold on the market. It is beneficial to work with industry stakeholders to find more value in the businesses main propositions (Anderson, et. al. 2006).  Listening and understanding customers needs along with the supply and development of serving those needs through value proposition enhancement is important for capitalizing on the service concept.

One an organization understands their true value propositions they can work on developing their marketing concept that runs as a theme throughout their business and into the main marketing message (s). The marketing concept can be described as a management philosophy that helps organizations understand their own needs and the customer needs in the achievement of their objectives (Johnston & Clark, 2008). Somewhere along the line both the organization and the customer need to be drawn into this shared concept.

The central message of any marketing campaign must be in alignment with the service concept. If customers are expecting something different than what is being offered they are likely to be dissatisfied. If they experience something greater than what is expected they are likely to be satisfied. This satisfaction or dissatisfaction has a huge impact on the success of businesses and possibilities for future growth.  Do you know what your business is truly offering?

Tips:

-Define 2-3 propositions your business currently offers.
-Understand how your customer views your offerings to create the service concept.
-Redefine your business propositions for maximum value and revenue generation.
-Conduct a market analysis to determine if those 2-3 propositions have maximum value.
-Strategically align the organization to the new 2-3 propositions.
-Sell those new propositions through marketing.
-Review the performance of the organization.
-Review and adjust the propositions as necessary for future growth.

Anderson, J. et. al. (2006). Customer value propositions in business markets. Harvard Business Review, 84 (3).

Johnston, R. & Clark, G. (2008). Service Operations Management: Improving Service Delivery. Prentice Hall; NY

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