Value paths guide the customer journey
Steven Forth is a Managing Partner at Ibbaka. See his Skill Profile on Ibbaka Talent.
The customer journey has become one of the critical tools for service design. It switches all of your business processes around and puts them in the context of the customer’s experience. A well researched customer journey has become a critical tool for everyone from revenue generation (sales and marketing), where the focus is on the buying journey, to implementers, to the customer success team.
The customer journey is often defined as a series of touchpoints with the customer and swimlanes that describe activities by the customer, the service provider, the messages being exchanged and the emotions felt by each party at the touchpoint (service design has deep connections to design thinking with its focus on empathy). Experts in journey mapping, like Jerry Angrave, author of The Journey Mapping Playbook, point out that a lot of the ‘experience’ occurs between the touchpoints. This is important to remember as we think about how to connect value and price to the customer journey.
Ibbaka’s approach to the customer journey
Ibbaka is often engaged to research and describe the customer journey. This is often a follow up to our work in value-based market segmentation and a precursor to value model development and pricing model design. We then use these to plan value communication and to document value delivery and value capture (in price) across the customer journey.
To do this, we had to add in some additional swimlanes.
Value Communication
How are the value drivers communicated? When are economic, emotional and community value drivers used? Are there differences in response depending on when these value drivers are introduced, how they are introduced and who is in the touchpoint (see the example of the Finance Director and Head of Nursing below).Price Communication
When do you introduce pricing? The standard advice is to introduce price only after you have established value, but is this always possible or desirable? If the price metric is connected to the value metric, introducing that metric early can help shape the conversation. The relative price is also an important anchor (in the behavioral economics sense) and knowing the approximate price of the solution, the software subscription, the data and the services that will support it shapes the perception of value.Value Delivery
When and how is value delivered across the customer journey? The pattern of value delivery over time has a big impact on how you price, as is discussed in this essay on OpenView.Value Documentation
It is important to know how you will document value as it is delivered. Memories fade quickly and the old adage ‘what have you done for me today’ means that value delivered in the past is soon forgotten.
A story from the field - the finance director and head of nursing respond differently to the order of messages
The customer journey is different for each actor or persona, and the order in which certain messages are delivered can have a big impact. Some years ago I was involved in the go-to-market strategy for a medical device that offered a big financial saving to a hospital and that contributed to the quality of patient care and the experience of the nursing staff. The key actors, the Finance Director and the Head of Nursing responded differently depending on the order of the messages.
The head of nursing needed to understand the impact on their nurses and on the patients before engaging with the economics. When presented with the economic argument first it was hard to get engagement later on and the close rate was much lower.
The Finance Director was more flexible, and tended to care especially about patient outcomes, but there was some preference to begin with the economics and this did lead to a slightly better close rate.
What to do when one has to present to both at the same time? In this specific case, it is better to start with the emotional value drivers and build to the economic, but only if you are forced into a joint presentation.
The customer journey is designed
Is the customer journey discovered or designed? It often feels like it is discovered as the first version that people see is the result of customer and market research. It is something that has evolved over time.
In fact though, the customer experience is something that you design, even if you cannot completely control it. Think about the layout of your local supermarket (here is an interesting article on common patterns of store design). Companies like Wholefoods (now part of Amazon) invest a lot in the layout of their floors, and the floors are meant to guide you through them (Ikea is even more directive in its approach).
These paths are designed, and the design is informed by data, but they are generally open and flexible. The same is true of most customer journeys.
Value paths inform the design of the customer journey
As the customer journey is designed, how do you go about designing it? The critical tool is the value path.
What is a value path? A simple definition is …
Value Path Definition: A value path is a series of actions taken by an actor or several actors that culminates in the delivery of value.
The APQC offers a more general definition: A value path is a process which links process performance, business outputs, and organizational goals to focus on value creation.
Here is a drawing of a value path from the APQC article.
From ‘What is a value path’ by Holly Lyke-Ho-Gland at the APQC.
Note the connections from Process Performance to Business Outputs to Business Outcomes. The value path is only complete when it gets to a business outcome. And this is where the value path maps back to the value drivers, be they economic, emotional or community.
This is the critical thing. The value drivers are promises made to the customer. The value path defines what each actor needs to do, and the experiences that need to be designed, to make sure the value is delivered. The customer journey is the outcome of these designs, just like the paths that people take through stores is the result of their many individual choices but is guided by the floor plan. The value paths are the guide through the customer journey.
A simple process to design the customer journey using value paths
Research the value drivers
Align value drivers to market segment and to users (which actors in which segments get which value drivers)
Define the destination of the journey, how has the world changed when the value path is completed
Describe the actions that need to be taken to get to the destination
Ascribe the action to an actor, make sure that each actor is motivated to take the action and gets feedback on taking the action
Explore different paths to the destination and see how to get each actor to take the action that leads to progress along the path
Optimise the paths for each segment
An optimized value path is optimized on three dimensions:
Probability of completion - sadly, many value paths are never completed so the promised value is not delivered
Speed to value - How long does it take to get to the destination? How many actions are required? Are their shortcuts?
Cost of execution - How much time and effort is required of each actor? How can this be reduced?
For people who want to go deeper into this, a related approach is Value Stream Engineering. This approach is most often used in software development, but there are things to learn from this for a more general approach to value paths and the customer journey.
Implement Customer Value Management with the Ibbaka Value Pricing Dashboard
Value paths guide the customer journey (this post)
How would you learn about pricing and customer value management?
