Now Meet the Customer: The Collaborative Value Chain - Customer Relationship Management

The extended value chain worked on the principle that all aspects of a company from the internal processes that governed the corporate parent to the relationships that engaged the suppliers, vendors, and business partners applied well to the more traditional CRM 1.0 notion of being able to manage the relationships of customers so that they had an optimal useful experience with the company. The company still played the central role.

But with the advent of the “era of the social customer”, the nature of the value chain altered. Because a significant segment of the customer base was demanding entrance into the company and participation in the planning of their experiences with the company, the customer’s personal value chain (PVC) had to be accounted for. This meant the things that affected their lives individually, whether the company had control over it or not, became meaningful to the revenues and profitability of the company, because those personal occurrences and behaviors affected how the customer engaged the company. But, of course, there is no way for a company to control the personal value chains of the individual customers. Thus, engaging those customers in some form of collaborative activity became very important, actually a mission-critical imperative and forward-thinking companies did just that. The customers’ expectations were that the company would be transparent, trustworthy, and willing to provide them with what they needed to team up. This was a dramatic change, even though it seems to be not much more than a word shift from “extended” to “collaborative.” After all, what’s that? A gain of five letters? Piffle.

But to see that this is more than piffle, we have to understand the customer’s role in the CVC before we can “know” the CVC itself.

Personal Value Chain
When I came up with the idea of a personal value chain, I struggled with a way to clearly explain it, falling into the “why explain something with a few words when a million will do” trap for quite a while. Well, damned if Patricia Seybold didn’t answer it for me with an economy of language in her book (and blog) Outside Innovation:

We use Eric von Hippel’s term, “lead users, ”to describe the somewhat larger group of customers and non-customers who are passionate about getting certain things accomplished. They may not know or care about the products and services you offer. But they do care about their project or need.

Eureka! I get it now. The personal value chain is the institutions and individuals that I utilize each day, each hour, to both interact with other institutions and individuals and to help determine how I’m going to interact with them. It is solely under my personal control. It solely exists for my purposes. No institution or other person has any control over it. They can only control their own behavior and interactions with it. It is my personal agenda and what affects it and what it has an effect on.

Michael Gaylord, vice president at TV Land Digital:
It’s much harder now to accurately mine the data and understand consumer behavior because there are so many touchpoints. The whole notion of “come to one website and one brand” is quickly eroding. Consumers aggregate their own content, on their own websites. Their experience with content providers is much more ephemeral.

One story explains it all. About two years ago, I was using a Palm Treo. I wanted to trick it out, which shows you how lame I am trick out a Palm Treo? To do that, I needed to accessorize. I ordered some things from two different Palm Treo focused sites. One was TreoCentral and the other was the Palm home site. I ordered on a Sunday and ordered two items one from each site. The Palm home site sent their item by UPS, and TreoCentral used FedEx. The UPS package was sent ground, but only after I used that valuable little tool that estimates the cost and the travel time for the package based on zip codes. Two days. Federal Express was second-day air. My expectations, thus, for both packages to arrive on Wednesday.

Both sites were diligent in notification. I knew by Sunday night that both packages shipped that night. Still, Wednesday was my expectation for each of them. Wednesday was when UPS showed up. Tuesday was when FedEx showed up.

The result? FedEx had exceeded expectations. UPS met them perfectly. Also, since the originators were responsible for the couriers, both had provided me with an exceedingly painless and pleasant experience.

Would I use either of the sites again? No! I have an iPhone now. Why would I need them? C’mon! But if I still had a Treo, would I? Sure, without qualms. Would I use UPS again? Of course, they met expectations perfectly. But FedEx exceeded expectations, so they gained a slight edge in courier competitions when weighing the future even though they weren’t the central players in the experience stakes here. TreoCentral and Palm were.

That is how a personal value chain works. These two purchases and the experience associated with them met my “project” (the purchases to trick out the Treo) requirements. However, there were important personal decisions I made out of the control of the originators of the experience. Those decisions had a bearing on what influenced me and how it did so, and what my expectations were of the pending interactions. For example, if I paid for two-day shipping, I expected it in two days. If I paid for ground shipping with a two-day expected arrival, I expected it within a reasonable time frame close to two days. In other words, I had a nuanced difference in how I approached each carrier.

This personal value chain is the driver of the customer’s activity, be they a B2B customer or a B2C customer. It is the set of events, memories, agendas, relationships, processes, rules, and experiences that the customer has that affects how they interact with you and/or your company.

One piece of advice. Since you can’t control the customer’s personal value chain at all all you can do is provide them with what they need to meet those agendas. Just be mindful that the effect of all the other parts of their value chain might impact you at any given time.

Co-creation of Value
The benefits of a collaborative value chain is almost what the name explicitly states collaboration between internal corporate resources with external resources to innovate, and/or to create value in ways that would otherwise be either less effective or more expensive. The benefit is that some value is created for all the parties involved. There is an enormous volume of literature out there on the business models for co-creation of value. The rules and the infrastructure that allow customers to participate in the activities of the company are designed such that not only are the customers an integral part of the value proposition of the company but the customer’s relationship to the company will also shift.

While examples abound throughout this book, I wanted to acquaint you with the concept. You’ll see it implicitly and explicitly in every facet of Social CRM thinking, planning, and actions in this book. If you’d like to read more on it, I highly recommend C.K.Prahalad and Venkat Ramaswamy’s The Future of Competition:Co-creating Unique Value with Customers. Their models are exceptionally clear and their examples, while limited, are really interesting especially John Deere.


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