What is value?
A better question: How do your customers define value for themselves?
At the Agile 2014 conference this week, "value" was a buzzword - which is great. Customers should be the focus of what we work on.
- First, because they give us money.
- Second, because they can be our salespeople for us.
- Third, they are good at figuring out what is useful - and give us feedback based on what they choose to use.
I notice companies spend a lot of time thinking that only low-cost gives value to customers. They talk about low-costs to the point where it makes a product a commodity, rather than focusing on how their features benefit users. The airline industry did this, making the flight experience a mode of transportation like a car or bus, rather than what it was in the early days - a stylish way to travel.
I flew on Spirit Airlines (a low-cost airline) on Sunday. The value they offer is in the cost and how basic you can travel.
I didn't realize how many aspects of a flight could be monetized:
- carry-on bags
- checked-in bags
- telling Spirit about your bag count at booking vs check-in vs at the counter
- printing tickets at a kiosk
- just going to a counter at the airport
- and the list goes on.
They even do some things that are non-standard amongst airlines, such as defining overweight bags as being over 40 pounds rather than 50 pounds (of course, there is a fee for an overweight bag). Ironically, the fee in that case is less than other airlines.
I was exhausted being nickeled and dimed by the time I got on the plane. Luckily, I didn't want a beverage (another $2 each) or a snack. Given the lines and the planning you need to do to save money, I found it to be more of a hassle than worth it for me.
I read a blog about why Spirit fits the bill for some people. And it made sense - a group of 4 could fit in another vacation trip during the year by sharing luggage and having no carry-ons. It's awesome for families who are on a budget.
Those of us who do business travel by ourselves don't really benefit from Spirit's cost structure. You have to take at least one bag anyway, and after a long day in a meeting, the last thing you want to do is wait in a line to maybe save a couple of dollars that you can expense anyway.
So Spirit has it's place. And I realized during the experience that I was not in their customer set who valued what they were offering.
Virgin America's flights offer value in the experience you have during your trip. The flight attendants don't hassle you. The food is pretty good. There's a lot of space - even in coach. And you can upgrade easily. The value is comfort and ease. They don't charge a bunch - more than Spirit, but it is worth it. Then again, I value that that I'm not hassled and am willing to pay more money so I can be left alone to enjoy the flight.
Other airlines offer great point programs for frequent flyers - as well as lots of locations for those frequent flyers to use their points. That's another customer value. I'm not traveling as much as I used to these days, so those benefits don't attract me and I don't see value in it.
And it's ok that I don't see value in it - others do! And those customers fly those airlines faithfully, while I choose to fly Virgin America faithfully. I share Virgin's values for their product - why I am a customer.
Companies need to think more about what they offer and how they are providing value to their customers. Customers who share that value will find them and use the product. Sure, low-cost can be a factor, especially for a commodity product, but it is not the only factor. You can help customers in other ways - not always the most obvious ways - but those other ways may be ways that make your customers your salespeople to get more customers.
You need to make it clear to customers what you are offering for value. Sometimes companies find that difficult - because it is - so they resort to cost. A shame! No one wins in a price war.