Chapter 3

Give Your Customers What They Really Want
Deliver MVA

If I were to stop you on the street and ask what business you were in, you would think the question naïve and the answer terribly simple: Your business is defined by your products and services. Deere’s business is tractors; Prudential’s is insurance; Microsoft’s is software. If I were to further ask what customers wanted from your company, you would probably say something like "Innovative and high-quality products [or services], delivered at a fair price." Perhaps after reading Chapter 2, you would hasten to add, "In a way that’s easy for customers."

Bad Answers:
These answers say a lot about why your company is having so much trouble coping with the customer economy. They reflect a classic introspective, product-centered view of the world. They are relics of an antiquated style of thinking that puts you and your products first and your customers second, assumes your customers actually want what you happen to make and sell, and asserts that all you have to do is make and sell them well.

You couldn’t be more wrong. Your customers have no interest in you or your company and only a little more in your products or services. That you and your products occupy center stage in the drama of your own business life does not alter the fact that you and they are merely bit players in your customers’ lives. What your customers care about is themselves, and from their point of view, your only excuse for existence is your ability to improve their lives and their businesses. To the extent that achieving that goal involves your products and services, your prized creations on which you lavish love and attention, fine; but cutting-edge, high-quality, low-priced products are only the beginning of the story.

The last chapter examined the imperative of becoming easy to do business with. To be sure, simplifying the customer’s life is a necessity, but it is only a start. In the customer economy, you need to do much more than that. You must go beyond merely giving them your products and services; you need to help them solve the problems that motivated them to ask for your products or services in the first place. In short, you have to provide them with more value-added (MVA). ETDBW means that you continue to give the customer what you always have but in a more convenient way; MVA means that you give the customer more, perhaps far more, than you ever have before. It goes beyond simplifying your customers’ interactions with you to delivering solutions to your customers’ problems, of which your products and services in their native forms are but small pieces.

There is a hoary, apocryphal story about an annual meeting of a major manufacturer of power tools. The chairman stands up to address the assembled shareholders. "I have some bad news for you," he says. "Nobody wants our drills." The audience is shocked. At last report, the company had a 90 percent share of the drill market. The chairman proceeds, "That’s right, nobody wants our drills. What they want is holes."

All customers, whether individual consumers or businesses, have problems that require resolution. Your product or service, no matter how good, is inevitably only part of the solution to those problems. For instance, you may be selling automobiles, but that automobile is only part of the solution to the customer’s need for transportation. Customers also need gasoline to fuel the car, as well as maintenance services and spare parts to keep it running. They will need financing in order to buy it, insurance to protect it and themselves, and maps to get from one place to another. Similarly, the drill is only part of what the customer needs to get the holes that he is looking for; he also needs a stud finder, the right drill bit, and knowledge of how to use these tools. Individually, each element is a product or a service, but when combined, they comprise a system solution that solves the customers’ underlying problem.

When each of these products comes from a different specialized company, the customer has to put all these components together so they work. In certain complex environments, this goes by the official name of "system integration"—and it is often no small undertaking.

When products are well differentiated, customers may be willing to pick and choose from among the best ones and endure the trouble of integrating them. But in a world of commoditized products and powerful customers, the key to success lies in turning your focus away from yourself and your products and toward your customers and the solutions they seek.

You can visualize the principle of MVA as a ladder with your product at the bottom and the solution to your customer’s problem at the top. The more help you provide your customers to fill that gap, the more value you add to them, which, of course, differentiates you from your competitors who are still scrambling around at the bottom of the ladder. Also, it is to your advantage to control as much of the ladder as you can—customers will be less likely to abandon you in favor of someone else, lower down the ladder, who offers less value. At the same time, your opportunity for margin and profit increase.

This is not a new idea. In the 1950s, IBM rose to great success with such a strategy. In those days, no one would have accused IBM of having the best computers. While they were workmanlike and more than adequate, its competitors often had superior price performance or more advanced technological features. IBM’s genius was to recognize that none of its customers wanted computers per se. What they wanted were solutions to their business problems of the day: payroll processing, accounting, and inventory management. IBM surrounded its basic computers with a host of related products and services that would help the customer solve these problems, such as application software packages, system analysis services, installation, training, and ongoing maintenance. This idea doesn’t just apply to computer systems; it can be applied to virtually any product or service. Every business generation seems to forget, and then rediscover, this very basic principle.

In order to deliver more value-added to your customer, you need to ask these questions: What do our customers do with our product or service after they receive it from us? What are the broader business or personal problems that our customers have? What more can we do to help them solve these problems? Thinking in these terms gets you beyond your old product perspective and forces you to think as your customers do.

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