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A podcast based on the winning principle that entrepreneurs need only know the laws of economics plus the minds of customers. After that, apply your imagination.
On this week’s Economics For Entrepreneurs podcast, Paul Tenney describes and explains the 8 stages of his international journey to start, grow and manage a customer-success focused database technology company in Asia.
Key Takeaways & Actionable Insights
Storytelling can be a powerful aid to effective business strategy. A good story can identify both a destination and a path to get there, and unite people on a shared journey. That’s why we like to use the Economics For Entrepreneurs podcast to tell journey stories from time to time: to illustrate and inspire.
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This week’s guest, Paul Tenney, tells us a particularly illustrative journey story, since it combines an entrepreneurial career of achievement and purposeful geographic mobility.
First, pick a promising industry with a potential for long term growth.
In the 2000’s, Paul identified database marketing technology as a growth industry, with expansive future promise but current low maturity (“e-mail spammers” were disdained at cocktail parties).
Learn and build a track record working for a growth company in the growth industry.
Paul rapidly accumulated executive experience, since growth demands that all employees step up to new responsibilities.
Develop your customer focus.
A fundamental lesson of Austrian Economics is that understanding customers and their needs always comes first in business building. This is especially true in emerging business technology. It’s easy to become focused on “product” (the technology) and lose sight of the customer, who may not understand the tech but view it as a means to an end rather than an end in itself. Paul focused on customer success activities, which revealed customer problems to be solved, and taught him the primacy of customer care in building business relationships.
Accelerate your accumulation of experience.
Experience becomes knowledge and knowledge becomes a personal competitive advantage. A growth business can provide accelerated knowledge-expanding opportunities. In Paul’s case, the opportunity came via an international posting, opening new customer vistas and revealing new customer requirements from the same technology.
Identify a partnering route to launch your business.
Your goal is to establish an independent business to run. The challenge of the transition from employment to entrepreneurship can be modified in a number of ways. One is to find a partnership that can both bear some uncertainty for you, and provide you with a strategic resource advantage. Paul partnered with the company that had previously employed him to provide technology, so that he did not have to build it from scratch. He developed his own customer base using this technology.
Establish an initial value proposition.
The technology partnership supported a strong customer value proposition in Paul’s local geography: experience the benefits of world-class big company tech, with customized/localized service, and the low unit economics that come with the partner’s scale.
Then take the Customer Success route to deeper understanding of market needs.
Paul had learned how a well-developed Customer Success capability could generate insightful customer problem statements. These represent unmet needs for which Paul’s new company could develop new and unique local solutions.
Gain higher ground with an advanced business proposition.
Paul was able to establish new high levels of customized local service (e.g. language) while maintaining the global list price for technology. Insights gleaned over time led to the realization that simplifying the technology proposition – e.g. by reducing the complexity caused by hyper-personalization of e-mail marketing to end-consumers, and focusing on the binary question of whether or not e-mails generated sales – resulted in a better customer value experience.
This focus also resulted in new-to-the-world services (such as the “fatigue curve” and “rehabilitation rate”), further elevating the value proposition.
Paul shared a lot more of his experience: about raising capital, about value theory, about the role of resilience in the entrepreneurial journey, and about the customer success of de-complexifying technology. Don’t miss his inspiring journey story and download the free illustrated journey map here.
Learn more about Paul’s company Ematic Solutions from their company website.
https://hunterhastings.com/wp-content/uploads/2020/01/e4e-cover-49.jpg6801600Hunter Hastingshttps://hunterhastings.com/wp-content/uploads/2021/03/hh-logo-blk.svgHunter Hastings2020-01-21 05:55:542020-01-24 09:41:0949. Paul Tenney’s Global Entrepreneurial Journey Leads To Database Technology Success in Asia
Learn how directly Austrian Economics can be applied in entrepreneurial business design. A creative founder of a financial services firm demonstrates to customers how an understanding of business cycle theory and monetary theory can be applied to investment portfolio design.
Key Takeaways & Actionable Insights
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Innovation often emerges from the combination of existing components in new ways.
In Chris’s case, the new combination was his knowledge of Austrian Economics – specifically Business Cycle Theory and Monetary Theory – and of Finance. He invested a great deal of time and effort in mastering both parts of this knowledge combination.
Chris Identified An Unmet Customer Need, A Dearth Of Available Solutions, And A Potential for Market Growth.
There were a few – probably a very few – customers for a financial services offering designed with recognition of the relevant principles of Austrian economics in mind. But the fact that there was at least some customer need provided evidence of potential. Then external stimuli such as the 2008 financial crisis and the Ron Paul Presidential Campaigns caused a growth in demand.
A value proposition naturally emerged.
For a narrow but highly receptive target audience, the value proposition that “Austrian Economics is vitally important to designing investment portfolios” proved to be very effective in generating a value anticipation.
Communication skill is a critical element.
A value proposition doesn’t sell itself. Chris utilized – and continuously polished – his communications skills to help customers fully appreciate the direct link to their desired value: a feeling of improved financial security because the uncertainties identified by Austrian Economics are accounted for in portfolio design.
Chris’s implementation was consistent with the value proposition, and capable of delivering.
In portfolio design, the product of Chris’s service firm, the inputs from business cycle theory and monetary theory are top-down elements. Chris added the bottom-up element of personalization of the design process to the individual customer. This is classical Austrian entrepreneurship: understand the customer’s needs, empathize with them, and customize the service so they feel individual satisfaction of idiosyncratic needs. In subjective value analysis, portfolio performance is not the sole criterion for the value experience. Customer feelings are far more significant.
Chris keeps an eye on the competitive frame of reference to maintain the uniqueness of his offering.
Chris’s competition is not other investment advisors. It’s the general demeanor of Wall Street sales-focused firms. “Stay fully invested” and “Don’t try to time the market” are typical sales communications of these firms that don’t truly have customers’ best interests in mind. He can always utilize this contrast as a value frame of reference.
Chris’s success exemplifies the clarity that results from candid entrepreneurial self-assessment and the embrace of the entrepreneurial process.
Self-assessment = In what field am I best resourced to enter and do business?
Entrepreneurial process = Identify opportunity by identifying customer dissatisfactions in that field.
https://hunterhastings.com/wp-content/uploads/2020/01/e4e-cover-48.jpg6801600Hunter Hastingshttps://hunterhastings.com/wp-content/uploads/2021/03/hh-logo-blk.svgHunter Hastings2020-01-14 05:15:122020-01-24 09:46:0548. Chris Casey’s Journey To A Distinctively Austrian Financial Services Business
John is a very successful repeat entrepreneur (he founded and grew multiple businesses in multiple fields and had multiple successful exits). He looked back on his successes and formulated a 10-step process that all entrepreneurs can follow, with a full suite of tools we can all use.
This beats the business school case study method!
Key Takeaways & Actionable Insights
Entrepreneurship is a process. Taking this view enables successful navigation over time, whatever the interim ups and downs.
Sometimes the process can feel like stumbling through a jungle, tripping over rocks and vines, always picking yourself up again and marching onwards. Don’t expect the process map you start with to be the one you continue with. Don’t plan too far ahead. Do be adaptive. Nonetheless, the process view is a source of support during the journey.
Processes require operating tools. John Chisholm’s toolset starts at Need and Advantage.
“All you need is a Need and Advantage.”
Need = “A real, unsatisfied customer need in an area about which you are passionate.”
He defines Need in an Austrian way: a subjective value sought or anticipated by a customer. He defines Customer as a living breathing person (or group of people, as with a corporate customer) rather than an abstract “market need”. Unsatisfied means that the need is not addressed by currently available products and services (requiring the entrepreneur to understand customer dissatisfaction). And Real means shared by a sufficient number of customers or sufficiently intense in one or more customers to make it worthy of you to satisfy.
The entrepreneur must have an advantage for satisfying that need. John’s process is aimed at establishing and extending that advantage, in spite of the fact that existing businesses will have more and better resources than you.
John offers a 10-step process for entrepreneurs to follow.
You’ll find John’s process pretty complete, cogent, and consistent with Austrianism. We didn’t cover every step of the process in the podcast, but we did pick out two tools and one principle.
Make a STARS inventory of your resources and strengths and turn them to your advantage.
John recommends making and continuously updating an inventory of your individual strengths. The STARS acronym stands for Skills, Technologies that you know and can use, Assets and Achievements, Relationships and Reputation, and Inner Strengths. He has wise advice on each one of these subjects, and he suggests multiple uses for the completed STARS inventory:
Use it to assess the fit of your strengths with the customer needs you have identified.
Use it to identify strengths gaps you’ll need to fill.
Use it to build your own self-confidence (most people under-estimate their own strengths).
Use it to innovate by making new combinations by pairing STARS elements in new ways.
Map out a logical and sequential growth path with John’s “bowling pins” methodology.
John’s advice is to avoid tackling too large a market and too large a target customer group at the outset. Focus on a best fit intersection between your resources and customer needs. Label it. Then identify the next most logical adjacent customer need you can fill, ideally leveraging your learning from the first market. Keep on building up the map of adjacent needs to fill. When you’ve got to 10, think of them as bowling pins. Knock them down one by one, starting with the first – that’s your early focus – and ultimately completing them all. That’s your vision – the largest set of customer needs you can possibly fill.
John calls this process Upsizing A Customer Need, and notes that this bowling pin strategy is particularly persuasive to venture capitalists – they like it that you are focused, and also that you have a map to growth.
Make the most of limited resources: Different is better than better.
How do you overcome the fact that existing businesses in a market you are trying to enter have greater resources than you? John’s answer: focus on being different rather than better. If you can identify how to be different – with a different solution, for a different target audience (even if it is small to begin with) you’ll evade competition.
John has additional advice about scalability, network effects, partnering and other tools for growth. Listen to the complete podcast for a rich reward of process tools and methods.
https://hunterhastings.com/wp-content/uploads/2020/01/e4e-cover-47.jpg6801600Hunter Hastingshttps://hunterhastings.com/wp-content/uploads/2021/03/hh-logo-blk.svgHunter Hastings2020-01-07 05:30:322020-01-24 09:46:2147. John Chisholm’s Tools And Techniques For Success In The Entrepreneurial Process
Entrepreneurship is action. It’s a process in which the actions of the entrepreneur are decisive. In the final podcast of 2019, we suggest 8 action steps you can take for the betterment of your business in 2020 and beyond.
Key Takeaways & Actionable Insights
Below are the 8 actions you can immediately take to make your business more Austrian in 2020.
1. Conduct an Empathic Diagnosis.
The entrepreneur’s first job is to understand the customer, their hopes and fears, their goals and wants, and their feelings. There’s a skill for that, and a method. The skill is empathy – the ability to feel what the customer feels.
The method is empathic diagnosis. The secret is not to ask the customer what they want or what they need, but to ask them how they feel. They can tell you that, but they can’t tell you why. That comes in step 2.
Think of it as a conversation with a customer whose feelings you are aiming to identify via a discussion in context. Look for responses that have “feeling” words – painful, frustrating, boring, annoying. Success! You’ve hit an emotional seam you can mine. Now dig in to understand their goals, and the means they choose to achieve those goals.
After the interview, you can collate the dissatisfactions, the emotional pain points and the functional failures. Then you can curate these inputs into functional, cognitive and emotional components of a potential new solution – i.e. new features (functional), new beliefs about what’s possible (cognitive) and better feelings about the experience (emotional). You now have a first building block for the design of a service or innovation that has high potential for facilitating new and higher value for the customer.
2. Construct a Means-End Chain to generate insights about hidden customer Motivations.
The output of your empathic diagnosis provides the basis for your next step. The goal is to generate an understanding about the motivations of the customer that they can’t quite explain themselves. People do not have introspective access to their motivations. Motivations are unconscious. People don’t know what Rory Sutherland calls the real why that explains their actions.
Take an easel pad or a wall, mark out the links as different levels, starting at the contact point at the bottom and advancing one by one to the highest value at the top. Use sticky notes to populate each level with the appropriate customer responses from the empathic diagnosis. Then join the most pertinent items together that link each level – at this contact point, they perceive these features and attributes, that generate this functional benefit and this emotional benefit all of which are logically land causally linked to the pursuit of the highest value. Recalculate this sequence a few times until you are confident you’ve identified the strongest route to the highest value the customer is seeking when he or she is in your space. You now have an insight into the customer’s hidden motivations, and you can use it to build a strong brand.
3. Build a strong brand with our Brand Uniqueness Blueprint.
Building a strong brand provides you with a financial machine – a capital asset that can generate customer revenues reliably over time, because it meets customer needs and solves customer problems better than any alternative.
The brand uniqueness blueprint helps you identify the two parts of your brand foundation: who is it for – i.e. whose problem are you solving, whose needs are you meeting. The term for this is Relevance. And how are you solving that problem in a superior fashion – that’s Differentiation.
Use our brand uniqueness blueprint by clicking the link. You’ll find an instructions template, an example using a real brand, and a blank template you can use for your own brand. If you want to send us a completed blueprint for your own brand via our Mises For Business LinkedIn page, we’ll be glad to give your comments.
4. Complete a Resource Uniqueness Inventory.
Our first three action items have been directed at your customer understanding and embedding that understanding in your brand blueprint.
Let us turn to your firm’s capabilities. You want these to be unique to your purpose, just as your brand is. Austrian Economics focuses you on individualism, and that includes your own individual experience, knowledge and skills. Our fault often lies in underestimating our own unique resources. One answer to this fault is to conduct an inventory or an audit.
In 2019, Dr Stephen Phelan gave us a resource-based theory of entrepreneurship, under the acronym: PROFIT, standing for Physical Resources, Reputational Resources, Organizational Resources, Financial Resources, Intellectual and Human Resources and Technological Resources. Here’s a link to Steve’s list. You can use it to organize your understanding of your own resources.
5. Imagine a Future Value Experience that your resources can deliver.
Whom shall I serve?
One way to answer this question is to imagine a future experience that customers will value. Mark Packard showed us how to do this by activating customer value as a learning experience in 5 steps.
Predicted value – it’s a picture you generate in the customer’s mind with your value proposition.
Relative value – it’s a calculation the customer makes compared with alternatives.
Exchange value – getting the customer to actually exchange dollars for your offering.
Experience value – the act of consumption in which the customer actually experiences value.
Value assessment – the customer conducts an assessment of value retrospectively. Looking back on the cycle, was the experienced value greater or less than the predicted value. Was it better or worse than the alternative, perhaps a brand that the customer abandoned in favor of yours? Does it feel that the experience was worth the dollars given in exchange? This is a place to identify a measurement of the value you have generated – but be careful: it must be a measurement of feelings and perception, which is a tricky measurement proposition.
When imagining the new value experience you are trying to facilitate, make sure to imagine every stage in sequence and how you can best stimulate each one. Download the Value Learning Process Knowledge Map to help your understanding.
6. Initiate an innovation project to deliver on the imagined value experience.
Innovation is the indispensable fuel of entrepreneurial success. The customer is continuously changing – rebalancing their preferences, seeking improvement in their circumstances, looking to feel better about their current situation. Dynamism on the part of the entrepreneur is mandatory.
Curt Carlson gave entrepreneurs the formula for managing innovation systematically. He uses the formula he calls N-A-B-C.
N stands for identifying the customer need.
The A is your approach. Your business model, your uniqueness, your capability of delivering, your technology, your logistics, the complete package of commercially fulfilling the need.
The B is benefits per costs in Curt’s language – what Mark Packard identified as relative value to the customer.
The C in the N-A-B-C formula represents competition and alternatives. It’s imperative for entrepreneurs always to understand the alternatives the customer has available to them.
One of the most important ways Austrian Economics helps entrepreneurs is with a strategic appreciation of the role of time. Production, the process of delivering a value proposition to the customer, takes time. The entrepreneur assumes the cost of time, while the customer values time in their own subjective way and may seek alternatives that offer better time value. We are just beginning to understand how valuable time is to the customer – look at the success of just-in-time restocking systems, same-day delivery and overnight global distribution.
Steve Denning told us that time is now a strategic weapon of the entrepreneur – and a strategic dimension on which competition takes place. The customer wants speed, so the entrepreneur must manufacture speed.
A good step for the entrepreneur is to conduct a time audit. Examine all your processes that take time. Then imagine ways to reduce that time. Look at time from the viewpoint of the customer – where in the service experience would they welcome time reductions or time savings? How could you deliver them? Make time part of your innovation program. Give time back to your customers.
8. Identify your next innovation that makes life easier for the customer.
Austrian Economics always looks at business from the customer’s viewpoint. It sees that the overarching strategy that defines the digital era from a customer perspective is making things easy. Easier by a factor of 10X or 100X. Online purchasing is easier. Overnight delivery is easier. Cloud computing is easier. Subscription models are easier.
Customers today are permanently dissatisfied with the degree of difficulty of getting things done. Because they’ve seen how much easier things can be in so many areas, so many parts of the landscape. Entrepreneurs are competing to make things easier for them.
So here’s an exercise you can conduct. Imagine a way in which you can make things easier for your customers. Your empathic diagnosis might reveal several ways. Then imagine how your system could deliver the increase in ease – by a 10 or 100X factor. Then imagine a piece of digital intelligence or AI that might be able to implement the improvement for you. Then search for it on Github or elsewhere. You don’t have to develop the technology – you just need to imagine what it can deliver in increased ease for your customer.
Summary
In summary: these are 8 action items that are suggested by Austrian analysis for improving your business by improving your understanding of your customer and your delivery of new and better solutions for them. All 8 are practical and depend mainly on imagination. They cover empathic understanding, branding, resource assembly, value learning, innovation, costs, convenience, and time. We hope that we have provided valuable content for you to think about as you make your business more Austrian in 2020. Let us know.
In an attenuated Christmas Eve podcast, we highlighted four of the useful principles we covered during 2019.
Principle 1: Customer Sovereignty – Which Means Putting Your Customer First.
The economists call it customer sovereignty – the principle that it is the consumer who ultimately decides which businesses are successful and which are not, as a result of their purchasing (or not purchasing) entrepreneurial offerings. Stephen Denning calls it The Law Of The Customer. John Rossman calls it Customer Obsession.
Entrepreneurs who understand the leverage of customer sovereignty do everything they can to know and understand their customer’s goals, values and feelings. They seek out negative emotions – disappointments, unease, a feeling that things could be better – because these are the inputs for designing new offerings that customers will welcome to make their lives better and relieve their unease.
The method of Austrian Economics in this regard is empathy. It’s a soft skill you can nurture and develop with practice. Use the empathic diagnosis tool that we provided earlier this year (link below).
The techniques for empathy include the Means-End Ladder (understanding customers’ goals, or ends, and why they select the means they choose to attain them) and Listening From The Heart, a market research technique given to us by Isabel Aneyba.
Check out these episodes and PDF resources for a deeper understanding of Customer Sovereignty:
The mainstream economics concept of competition considers firms competing to sell identical goods to an identical audience. Entrepreneurs take the opposite tack: they choose a select group of customers whom they understand deeply, and they assemble a unique set of capabilities to deliver unique, customized solutions.
The tools we presented during the year include differentiation and branding. Differentiation is the pursuit of uniqueness in your offering. It requires providing your customer with a means to achieve their goals that is different and better than any alternative. That can be faster, or easier to use, or more comfortable, or more personalized, or some other attribute or combination of attributes that the customer prefers. Differentiation is not achieved through pricing. It’s achieved by superior understanding of your customer and their subjective goals.
Trini Amador demonstrated how to capture differentiation in a brand. A brand is a promise – a unique promise only you can keep to help customers achieve their ends. It’s a promise that customers can embrace emotionally, and that you can deliver consistently, every time with certainty and without exception. Promises must be kept. Trini provided us with a templated process for brand building.
Check out these episodes and PDF resources for a deeper understanding of competition:
Austrian economics has always been on the leading edge of dynamically flexible resource allocation and capital assembly. Austrians see the worth of capital purely in the future revenue streams that it can generate from customers. If customers change, and the revenue stream changes, the worth of the capital has changed. The capital structure of a firm must change to reflect changes in the marketplace.
This applies to hardware, software, human capital, processes and methods and organization. Old capital must not be allowed to eat up resources that could be better used to serve customers in new ways.
With the arrival of the digital age, dematerialization, interconnectedness that can support rapid assembly and disassembly of global networks and supply chains, practitioners are now able to apply in practice what Austrian theory has been saying all along.
Dynamic flexibility is well-captured in the methods of the Agile revolution, as Steve Denning explained. And the ultimate expression of dynamic flexibility is innovation – the dynamic flexibility to supplant old technologies, old services, old organizational structures with new ones. Curt Carlson gave us his formula for successful innovation, and it’s very Austrian: always start with the customer’s need.
Check out these episodes and PDF resources for a deeper understanding of Dynamic Flexibility:
We finished the year with three episodes on the new economics of value. It’s the opposite of traditional economic thinking for entrepreneurs – the economics of scale and cost reduction. The economics of value entail selection of the smallest customer group to serve in the best possible way, so that they can experience maximum subjective value. It involves scaling down – personalization, customization, scarcity, limited availability, and high differentiation. We published a simple guide to the economics of value.
Mark Packard shared his latest research on the economics of value and specifically how customers experience it. They do so as a learning process, one that takes place entirely beyond the entrepreneur’s line of visibility – in the customer’s perception. Mark explained the neuroscience as well as the economics behind the process, and introduced a 5-part cycle of customer value learning. We published a flow chart and a set of explanatory slides, using pizza as an example.
The power of the value learning cycle is that it replaces the concept of the funnel for entrepreneurs. The funnel has built-in inefficiency – wide at the top and full of costs, with revenue at the end where it’s narrow. There’s a lot of waste. The value learning cycle, when used effectively, engages a small group of customers well-known to the entrepreneur, and guides them logically to an experienced benefit that they assess positively.
Check out these episodes and PDF resources for a deeper understanding of how customers experience value:
https://hunterhastings.com/wp-content/uploads/2019/12/e4e-cover-45.jpg6801600Hunter Hastingshttps://hunterhastings.com/wp-content/uploads/2021/03/hh-logo-blk.svgHunter Hastings2019-12-24 06:46:082020-01-13 17:42:0145. 2019 In Review: Four Principles Of Austrian Economics You Can Usefully Apply To Your Business
Entrepreneurs are redrawing the Customer Journey Map. Based on the latest knowledge from both economics and neuroscience, Dr. Mark Packard explains the five stages of the Value Learning Process on today’s episode.
Key Takeaways and Actionable Insights
To be able to adopt new ideas and successfully apply new techniques, it is sometimes necessary to discard old ones that are barriers to clear thinking. The theory and vocabulary of value illustrate one such barrier.
The language of business schools and many business books is that firms and entrepreneurs create value. That terminology implies that value is somehow embedded in the product or service the firm designs and markets, and that value is formed in the firm’s domain.
The business world has made a little progress in the last few years by opening up to the idea that value is somehow co-created by the provider and the customer. In co-creation, customers’ own usage of the service causes the value to be realized, and their comments, criticisms and suggestions become useful feedback to the provider to further improve the offering.
But we have known since 1871 that value actually lies entirely in the customer’s domain. Carl Menger wrote:
“Value is a judgment economizing men make about the importance of the goods at their disposal for the maintenance of their lives and well-being. Hence value does not exist outside the consciousness of men.”
Now, Mark Packard sheds more light on exactly how value forms and develops “in the consciousness of men” – or, as we would say today, in the customer’s experience.
Mark introduces the concept of value learning. This is the mental process through which the customer advances in response to a value proposition from an entrepreneur or a brand. It’s important for entrepreneurs to understand, monitor and measure the customer’s value learning. There are five stages, illustrated by our Knowledge Map Graphic below.
Predicted Value
Customers evaluate an offering that’s available to them with a mental prediction: I think that this offering might be valuable to me (i.e. make me feel I am improving my circumstances / make me feel better / help me towards my goal). Predictive value is translated into a price one is willing to pay for that experience. This willingness to pay is then compared to the price of the product. It’s a yes or a no.
Entrepreneurial action: Manage predictions strategically. Persuade customers that the predicted value is worth the cost, but don’t overhype your product. Identify those customers whose predicted value relative to your price is positive. These are your only current target (unless or until you redesign your value proposition).
Relative Value
The customer’s next cognitive action is to identify whether the predicted value is high or low relative to alternatives. These alternatives include not just other products in your industry (if any), but all other ways your customer might also satisfy the need that your product addresses. For example, one alternative is to keep their dollars in their wallet, if they think they can satisfy their own need for themselves at a lower cost (all in). The predicted value of your offering must be greater than all alternatives in their perception.
Entrepreneurial action:Calibrate your offering to the customer’s relative value calculation using price, features and benefits.
Exchange Value
If the customer’s Relative Value perception is sufficiently positive, they’ll exchange dollars with you. But remember to account for the customer’s uncertainty. If the relative value is comparable between alternatives, customers will generally prefer the more familiar (certain) value over your uncertain offering.
Entrepreneurial action:Use price discovery techniques to align price and relative value.
Value Experience
The customer uses or consumes the product or service. They’re generating feelings and perceptions as they do so, either positive or negative. Many of these are in response to a mental comparison with Predicted Value – is the experience better or worse than predicted?
Entrepreneurial action:Monitor the customer’s perceived experience. Be aware of variables in circumstances (time, place, mood, competitive environment) that can change their perceptions. You may need to guide the customer’s first consumption experience(s) to ensure proper use and optimal experience.
Value Assessment
The customer, either concurrently or subsequently, makes a mental value assessment based on their experience. Good or bad? Better or worse than predicted? Does my assessment result in predicted value for a repeat purchase or subscription?
Entrepreneurial action:Measure. This is the stage where measurement becomes useful. Find a measurement that works for you. It could be in sales dollars, purchase volume trends, or customer satisfaction metrics. Such metrics are mere approximations, however, and are neither precise nor set in stone. Be careful how you interpret measured results.
This value learning process is mutual. The customer is always evaluating and re-evaluating and the entrepreneur must keep pace in service, relationship management and innovation. It’s a never-ending cycle of value.
In future podcast episodes, Mark will share some of the new tools he has developed to help entrepreneurs master the cycle. Follow Mark on Twitter to keep updated between now and then!
https://hunterhastings.com/wp-content/uploads/2020/03/e4e-cover-55.jpg6801600Hunter Hastingshttps://hunterhastings.com/wp-content/uploads/2021/03/hh-logo-blk.svgHunter Hastings2019-12-17 05:16:472024-01-24 15:50:1344. Mark Packard on The Value Learning Process
