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Benefits of a Business Architecture

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Benefits of a Business Architecture

  • Tags Benefits of a Business Architecture, Business Architecture

Importance of a Business Architecture

The business architecture shows how an organization is structured and how its different elements fit together. Those elements and their relationships decide what must be done to reach specific goals. It will always provide you with particular guidelines to understand how the elements need to change in order to reach the new goals of the organization.

Technology is rapidly evolving, there are numerous changes in markets as well. Surviving hyper-competitive marketplaces isn’t easy and requires great agility from companies. You have to deal with new competitive threats around the globe as well. So understanding the true benefits of business architecture is necessary for future development and success.

How Your Organization Can Use a Business Architecture?

Business architecture can help you in numerous ways. It can totally transform your customer experience for the better. You could benefit from it while dealing with mergers and acquisitions (M&A) as well. You’ll be able to define a new market or start a new company. You’ll be able to introduce your product in the market more easily and profitably. You can also take care of business units and make many beneficial changes there.

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Bridge Between Strategy and Execution

Business architecture is like a bridge between your company’s strategy and execution. Strategies and operational demands are related to changes. In order to do everything successfully the ideas have to be translated into actionable steps, that can be implemented across the enterprise.

Business architecture is directly tied to the organization’s strategy, planning, and software development processes. Basically, strategy drives changes to the architecture, and business architecture translates those strategies for execution.

Focused and Aligned Strategy

A focused and aligned strategy is related to various external and internal elements of an organization. They have to be arranged in a specific way to support the achievement of your long-term goals. Your models should meet your business needs, so you’ll need to consider the aspects of business architecture here to do everything correctly.

Improved Decision-Making Strategy

Business architecture is a great way to improve your decision-making process. It can help you define more important and unique features of your organization. You’ll know what to do about your business units. You will get a pure business view of what you can achieve with or without technologies, and you’ll be able to evaluate everything without any organizational bias. You’ll be able to make better decisions based on every aspect and information that business architecture can provide you with. You’ll manage your investments, costs, risks, and many other aspects much better.

Increased Operational Efficiency and Growth

Business architecture is a solution for complex systems that organizations use. The complexity of specific systems might create numerous issues later. Besides taking care of this issue, it can help you to manage systems with better tools.

Agility in Business and IT Execution

Business architecture can also deal with IT processes and infrastructure more successfully, which is always connected to great results. Your IT teams will benefit a lot from business architecture because it can enable the optimization of IT tools and processes. You’ll have higher agility as well, so you’ll be able to understand and respond to changes in the industry faster.

Strong Security

With the help of business architecture, you can be sure of your security. It can help you to protect your data by strengthening your cyber security. The online world is expanding and evolving so you have to ensure that you’ll be safe and protected.

How to Use a Business Architecture?

Business architecture has numerous benefits that can be used to develop many aspects of your company. For example, if a business architecture team is working on the development of your business units, they will implement templates that will help each unit to develop a strategy and work to improve their quality.

Business architecture can be used to understand more about capability management as well. Also, you’ll be able to transform successfully, reduce costs and improve quality. For example, transforming a software company into a cloud services model would be easier with a business architecture.

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How to do a Value Chain Analysis?

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How to do a Value Chain Analysis?

  • Tags Value Chain Analysis

Importance of Value Chain Analysis

The importance of value chain analysis is great for businesses for a couple of reasons. It’s a tool that can help you study every process that your business is using. It ensures that your products will be delivered to your customers as effortlessly as possible.

Value chain analysis turns you into a more competitive, valuable, and efficient business. The change that can occur after this process will help you to create better products and deliver better services. Also, it will help you to create connections with other companies and more customers as well.

Identify All Value Chain Activities

In order to do a good value chain analysis, first of all, you need to identify all the factors that play any kind of role in product creation. Start with more important factors, then look through secondary factors as well.

Don’t be satisfied with simple answers and understand everything more deeply. You need to know what materials are used for your product, how many people work on that, how much time they need, etc.

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Calculate the Cost of Each Value Chain Activity

The next step is about figuring out how much money you spend on running the business. Having accurate information about this topic will help you understand how you are spending your money and how many benefits you get from this process as an end result. You’ll see which parts of your company require most of your funds.

Based on this information, you’ll know where you need to invest your money and how you can grow your business. You might reduce rent costs, and staff costs, or decide to promote more unique items or add new aspects to your products.

See What Your Customers Perceive as Value

You need to know what your customers need or want from you. In order to add more value to your products or services and become more competitive in the market, find what your customers perceive as value.

Most of the time customers don’t evaluate products objectively, because lots of them are influenced by society and their general environment. That’s why you have to understand their pain points and their exact needs. You can do online surveys to gather information, or work with focus groups.

Review Your Competitors’ Value Chains

In order to evaluate your competitors’ value chains you can consider several main points. Compare your process structure and operations to your competitors. Compare how you carry out different tasks. You can also review your high-level business strategies alongside your competitors. See what seems to work well, and what does not, and think about how you could use it. Check organic traffic, social media platforms, reviews, ratings, and every other aspect that will help you determine your competitors’ value chains.

Decide on a Competitive Advantage

At this point, you’ll have a clearer understanding of important topics, like your internal costs and your customers’ value. It’s time to decide what you are going to follow, cost advantage or differentiation.

You have to know what you are trying to achieve. For example, if your goal is to increase your income, cost advantage will be a more helpful option for you. But, if you want to become the market leader, differentiation is a better option.

If You Choose Cost Advantage

If you choose cost advantage you need to find ways, that will help you to optimize spending. To increase profitability, you might have to cut down production costs or cut the cost of different support activities. For example, you might replace certain human activities with workflow automation, or try to find cheaper delivery services.

If You Choose Differentiation

Differentiation involves adding value by offering a high-quality product that sets you apart from other competitors. A successful differentiation strategy requires good research and can help you to gain a competitive advantage. It will help you to set a premium price for your products or services.

You can use both of those options as well together to maximize impact. But while doing value chain analysis, you have to consider all the aspects related to them. It’s one of the most powerful processes your business can undertake, in order to reach new heights in the industry.

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How to use Michael Porter’s 5 forces to your advantage?

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How to use Michael Porter’s 5 forces to your advantage?

  • Tags Michael Porter's 5 Forces

Importance of Five Competitive Forces

Michael Porter’s five forces is a model that identifies and analyzes five competitive forces that are crucial for industries. They help you to identify your strengths and weaknesses. You’ll have a chance to analyze the competitive environment where your company is operating and generally use it as a very important tool.

These forces are related to the number and power that your competitors have and will help you analyze the power of new businesses in the market. Also, you’ll define more aspects about your suppliers, and customers which will help you to find ways for increasing your competitive advantages.

Understanding Michael Porter’s 5 Forces

Michael Porter’s 5 forces is a business analysis model which explains why and how different companies have different levels of profitability. Based on that, you can analyze your industry structure and corporate strategy as well. Generally, you’ll understand how your company can become more competitive, attractive, and profitable.

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Competition in the Industry

Competition is the first of the five forces. If the company has lots of competitors and its products and services don’t differ from others, the company will have less power. In this case, companies need to show their suppliers or customers that they have better products or services, or that they have lower prices. They need to show a wider audience just what makes them different. When the competition is low, the company can set up its own rules and set up higher prices as well.

The potential of New Entrants into an Industry

New entrants in the market could have a great influence on the company’s power. If the new company requires a small amount of time and money to establish its place in the industry, it’s not a good sign for the old ones. Basically, you are considering here how easy or difficult it is to enter a market when it comes to new brands.

New entrants could bring different issues for the company. When you are working on a marketing strategy, or you are making research to determine how to develop your company, consider all the companies in your market and their abilities, and the possibility of new businesses emerging as well.

Power of Suppliers

The next one from Michael Porter’s five forces is the power of suppliers. No matter what kind of business you have, online or offline, you would have a supplier for sure. Nowadays, businesses are reliant on other businesses while working on their operations.

But your company should work on several aspects to make sure that you won’t be overly dependent on suppliers. First of all, determine the number of suppliers in the market. Make sure that you’ll have more backup suppliers because it can be a great advantage for your company. Also, find out how much it would cost your company to change suppliers.

Power of Customers

Customers could have great power over companies and generally every important aspect of their industries. Their power could be changed with time or because of the company’s competitive strategy.

It’s important to know just how many customers a company has, how significant are they, and what the company needs to get new customers. When the company has a smaller client base, customers have more power to lower prices. While companies that have a bigger client base, can increase prices with fewer issues and can be more profitable.

Threat of Substitutes

The last of the five forces are related to the threat of substitutes. Everything that could be used in the place of a company’s products or services is already a great threat. Companies who have more unique products or services will be able to increase prices freely and work on more favorable terms. But when similar products can be found elsewhere as well, it could make the company lower prices to not lose customers.

The Framework of Porter’s Five Forces

This framework will help you to evaluate your competitive environment. It can help you analyze where your company is standing now and how you can move forward. When you’ll understand these forces and use them in your industry, you’ll be able to improve your business strategies and generate higher earnings as well.

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Measure your Customer Experience with your Net Promoter Score

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Measure your Customer Experience with your Net Promoter Score

  • Tags Customer Experience, Net Promoter Score, NPS

Why Use NPS for Measuring Customer Experience?

Having proper feedback is crucial for any company. Your customers are the ones who use your products and services and no matter how much knowledge you have about them, they’ll always have something valuable to tell you.

Net promoter score helps you understand the whole scenario which is related to your customers and their experiences with your brand. You’ll understand what are your strengths and what you need to improve. Also, you can identify who are more loyal customers and create connections with them.

Net Promoter Score as Foundational Business Metric

Net promoter score plays a crucial part for any company in regards to discovering the amount of loyalty and satisfaction that customers feel towards them. NPS can give you great information based on one single question about the chances of them recommending you to others. What your company could gain is a great insight into customer sentiments that will help you to plan your future operations.

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Transactional VS Relational NPS

Relational NPS surveys are done on a regular basis. For example, quarterly or annually. It helps you to understand generally how your customers feel about you and what’s their experience in your company.

Transactional NPS surveys are done after customers interact with your company. For example, when they are purchasing something from you or receive a support call from you. It’s generally better to use both types of NPS surveys in order to understand more about your customer experience.

Distributing Net Promoter Score Survey

Net promoter score surveys should be present on the channels that are more frequently used by customers. For example, if they use your mobile app more frequently you’ll distribute your survey there, but if they use your webpage more often your survey will be done from there. Surveys can be done in many different ways, via SMS messages and QR codes as well.

However, choose the platform for the survey very carefully, because in some cases sending emails rather than putting the survey on the webpage could be a better option. For example, customers might score based on their experience on the webpage itself and don’t give you enough idea about their experience with the brand. In this case, emails would be more helpful.

Capturing Operational and Experiential Data

First of all, when you want to measure customer experience with a net promoter score, you have to go through customers. Choose the ones that had a more recent experience with your company. Generally, they are more willing to leave feedback.

Gathering up operational data and experiential data from your customers will be great, but you need to analyze the whole information as well. This data will clarify more aspects about your customers.

Personalize the Survey

Without surveys, you won’t be able to understand what’s going on. However, there is a high chance that many people won’t participate. Some might not even open up surveys to at least check what they are about.

So provide them with personalized surveys. For example, include their names or the product name that they purchased recently in the subject line of your survey email. This way you are increasing the chances of them responding to you and also, you are creating a connection with them.

Tie NPS to Other KPIs

Besides surveys and analyzing responses that you gained, you have to ensure that you’ll use additional metrics as well. A net promoter score is a valuable tool for your company, but if there are some other aspects that you are interested in, you can read one of our articles as well – “How to measure Customer Loyalty” and also understand “Which Marketing Strategies Work for Loyal Customers”.

Customer Experience is a Moving Target

You should know exactly what your NPS is and how well your company is performing regarding customer experience. But this target is always moving and so it’s hard to not miss the mark.

That’s why it’s important to determine the NPS strategy that will work best for your company and also, back it up with frequent qualitative research. It will help you determine exactly what your customers think and how can you make your products or services satisfy them beyond their expectations.

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How to use the Strategic Business Unit in your marketing strategies?

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How to use the Strategic Business Unit in your marketing strategies?

  • Tags Strategic Business Unit

Importance of Strategic Business Unit

The strategic business unit (SBU) is an often talked about topic, especially when it comes to strategic management. It is actively adopted by numerous companies in order to grow and produce more products.

A strategic business unit represents an independent, specialized department or a sub-unit that is focused on a given objective. It has its own mission which could be very different from the parent organization.

The Main Focus of the Strategic Business Unit

The strategic business unit is mostly concentrated on long-term business goals. SBU manufactures and delivers its own products and makes all the decisions related to them, while the head office is tracking income and profits.

For example, Panasonic and Coca-Cola are great examples of SBU. Panasonic has separate divisions to manage different products. While Coca-Cola shows very effectively how multiple subsidiary products that exist in the same industry can be managed.

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Characteristics of Strategic Business Units

A strategic business unit that the organization will adopt should be well suited for the strengths and benefits of the company and should be able to use all the opportunities that will be in the industry. Also, each SBU has specific products and services.

A good strategic business unit will be a separate unit of business or a group of businesses, that can plan everything independently. They are dealing with all the responsibilities related to their environment, like profits, strategic planning, and general performance.

Types of Strategic Business Units

There are several different types of strategic business units, the first one is Stars. Stars are SBUs that are dominant players in the market and are characterized by high growth and market share. Cash Cows are the kind of SBUs that grow more slowly.

Sometimes organizations have difficulty deciding where they should invest their money, time, and resources. In this case, they have to decide finally, if they are going to invest in a specific business or just get rid of it, that is what Question Marks are about.

While Dogs are underachievers, they have a low market share, and their profits most of the time are only enough for their unit. In any case, most companies don’t invest in these kinds of units and prefer to search for more promising options.

How SBU Can Help you with Marketing Strategy

Marketing strategies are all about achieving the company’s goals, understanding customers, and creating a distinct competitive advantage. It is essential to understand the needs of organizations and what they need for improvement.

Information that you can get from here will help you to understand what kind of business strategic unit you need, how you can implement this unit in your organization, and how you can benefit from it. With a suitable strategic business unit, you can be more profitable and have numerous advantages. You can become more successful and visible on the market.

Factors That You Have to Consider

The importance of SBU is great for your marketing strategy, but there are several factors that you have to consider in order to take successful steps in the future. First of all, look through your industry and determine carefully what kind of products or services should be and should not be related to your strategic business unit. Make favorable choices.

Define generally how to choose SBU and understand its potential. Look through current SBU and try to understand more about potential SBUs. Define what kind of business models you would implement for your SBUs and how you are going to monitor those business models. 

How to Set up a Strategic Business Unit

When you are setting up a strategic business unit, you need to understand more about specific requirements. The very first one that you have to consider is adapting the organizational structure. You have to pay specific attention to this aspect when planning what you want to do for the business unit. Also, understand how your company could generally react to those changes.

You should carefully choose the managing team as well who will have a great understanding of your strategic business unit. You have to adjust the corporate culture as well. Generally, try to make your employees feel from the beginning that they are involved in a very important process and they are being appreciated by you for their effort.

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How much is a good Net Promoter Score?

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How much is a good Net Promoter Score?

  • Tags Net Promoter Score, NPS

Importance of Net Promoter Score for Businesses

Businesses stand on happy and satisfied customers so finding ways to measure their satisfaction is crucial. That’s exactly how net promoter score (NPS) can help you. With the information that net promoter score can give you, you can figure out what you need to improve, and how you can maintain high standards.

Benefits of Using NPS for Measuring Customer Loyalty

Numerous other options can help you to measure customer loyalty, but NPS is very frequently used for a couple of reasons. It’s a very straightforward metric that is very simple to use and understand. NPS makes it possible to accurately measure customer loyalty and satisfaction.

Also, NPS provides you with a full picture of how customer generally views your brand, and it’s related to their whole experience and not just one occasion. You can also understand how well you are performing against your competitors. It’s an easy, cost-effective solution that can give you good direction and help you understand what you need to change or improve.

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Interpretation of the NPS Scores

NPS scores can be interpreted differently based on different aspects, but generally, some numbers give you a very clear indication of what’s going on. If the net promoter score is below 0, it means that you have to sort out lots of issues in your industry. When it’s between 0-30 it means that you are in a good position but there’s still room for improvement.

If the score is above 30, it’s a good indication that you have mostly happier customers than unhappy ones and you are performing well. When the NPS score is above 70, it means that you have numerous happy customers and they are more than happy to be your brand’s ambassadors.

NPS for Different Industries

A good net promoter score is different for different industries. For example, companies that are related to the consultancy sector have higher than average NPS, because they have longer and more frequent interactions with their customers.

But when it comes to health care, or anything medicine related it could be lower, because of the mindset that the patients could have, it’s just not a pleasant experience for many to visit doctors and that’s why. So first of all, you have to understand what’s the average net promoter score in your industry and then identify the actions that you’ll need to improve customer experience.

Compare NPS Scores Within a Region

NPS scores are different for different industries but it’s also important to see what’s happening in certain geographical areas as well. Cultural differences decide a lot for the NPS score. For example, to speak generally Americans more frequently rate companies higher, while there’s a more different situation in Europe.

If a satisfied American customer is willing to score you with 10, a European customer will give you 8. While in Japan it’s simply poor etiquette to rate any business too high or too low, no matter how well they are performing.

NPS for Famous Brands

Competing against the net promoter score of famous brands would be interesting, but it’s important to not lose focus on your industry and first make sure that you’ll perform better than your competitors whom you are dealing with more frequently. Also, some of the famous brands have a higher net promoter score because they have a well-known company name or the niche market that they are operating in and it might not be related to customer satisfaction at all. Generally, the numbers are high here.

NPS for B2C Businesses

Net promoter scores for B2C businesses always highlight important factors related to customer satisfaction. Those types of businesses always have a bigger customer base, so can get more valuable information as well. The average net promoter score for B2C ranges between 24 and 57. 47 is already a good score. But you have to always follow industry standards and news because those results always change each year.

NPS for SaaS

A good NPS score for SaaS (Software as a Service) is approximately more than 31. A good range varies between 31 and 41, but those numbers change every year. Scoring above 30 would be good, but being close to 40 or overcoming that number would mean that your company can be distinguished from many others.

Many other industries have completely different scores, so before you come up with conclusions regarding your customer loyalty and satisfaction, look through your industry and geographical area one more time.

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Why does your company need Organizational Readiness Assessment?

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Why does your company need Organizational Readiness Assessment?

  • Tags Organizational Readiness Assessment

Importance of Organizational Readiness Assessment

Organizational readiness is all about the relationship between people, processes, systems, and performance measurement. Organizations should be ready for changes and new challenges because they can transform you for the better. But before you move forward organizational readiness assessment will help you to determine if your company has enough resources for specific projects or goals.

What You Can Discover from Organizational Readiness Assessment

After the organizational readiness assessment, you are more sure about your success and know that you are ready to take the next steps. During this process, you’ll mostly assess your project goals and objectives, your general expectations and concerns, and what’s your ability to adapt to the change.

Also, you’ll be able to find ways that could help you to minimize the chances of failure for your project, in order to just avoid unnecessary surprises. You’ll assess project governance and decision-making process, and any other aspects that could be critical in your unique situation.

Use Qualitative and Quantitative Methods to Collect Data

Both of those methods will help you to gather accurate data which is necessary for your organization. You can gather qualitative data based on interviews related to specific topics. For example, about the understanding of project importance, understanding the changes that will be in the future, etc.

While the quantitative method will help you to gather more information via surveys. You’ll have a better understanding of how employees feel about changes and the company generally. After analyzing this data, you can understand which departments need more support and what are the key risks that you might have to deal with.

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Readiness Can Help You to Get Familiar with the Audit Process

An audit is a very important process for the company, which can help you determine operational inefficiencies, help you review your systems, and generally provide you with objective insight.

The organizational readiness assessment is done months before the audit. This combo can give a company very good information about numerous crucial aspects. In order to have a better understanding of this topic, you can also read one of our articles – “How to do an Audit of your Company”.

It’s an optional step, but can help you to learn more about the standards that you are aiming for and can help you to get everyone in your organization on the same page.

Readiness Assessments Help You Address Potential Problems

First of all, you’ll have a chance to discover and address any potential issues before they become a problem for you and will influence any of your projects. You’ll be able to see potential gaps that need to be immediately addressed. You’ll gain information that will help you to improve any aspects that don’t seem beneficial for you and generally will help you to have better control over every aspect of your company.

Readiness Assessments Help You Address Changes with Employees

In order to change everything successfully in your company you’ll need to update your employees about everything and make sure that they are ready for those changes and have enough capabilities to get involved in important processes. Your employees will be able to have a better understanding of data flow as well and generally will feel more valued if you engage them in the organizational readiness assessment process.

What It Can do for Your Business?

A good readiness assessment is related to good organizational programs and project readiness. It can help you to take more innovative steps, it can help to completely restrict your company and achieve better results with larger and more complicated projects.

You will be able to pinpoint company resources that are available and valuable for you, will get a better understanding of the character of your team members since they are so important for changes in your business, and will know more about the areas of your business which need more attention and improvement.

How to Use It

After gathering information about your organization, about your strengths and weakness, you’ll be more ready for changes. You’ll have numerous advantages that will be very beneficial for you in order to make necessary changes for improvement.

You’ll have to evaluate if you are ready for certain projects and changes, like if you can meet specific requirements. It will be easier for you because of the information that you got from the organizational readiness assessment.

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How does your Net Promoter Score impact your Company?

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How does your Net Promoter Score impact your Company?

  • Tags Net Promoter Score, NPS

Importance of Net Promoter Score

Net Promoter Score (NPS) is a critical metric for any business and measures customer loyalty and satisfaction. It gives you an idea about the number of your loyal customers.

NPS is important to understand why customers become loyal to your brand, like what are their reasons mostly. You’ll have proper feedback from your customers and will find out just how satisfied they are with your products or services.

Benefits of Calculating Net Promoter Score

Net promoter scores give you very good feedback. It can be analyzed very easily as well. Marketing, sales, and product development teams move forward with this information very quickly.

NPS not only provides you with feedback but also enhances the customer experience as well. Based on the information that NPS can provide you with, you can even start working on loyalty programs and develop strategies that will help you to increase customer lifetime value.

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How to Calculate Net Promoter Score?

In order to calculate NPS, you’ll need to conduct a survey as well. During the survey, you have to ask your customers, for example, on a scale of 0-10 how likely they are to recommend you to a friend. Based on the scores that you’ll get, you can put them in different categories.

People with the lowest scores, like 0-6 will be detractors. People who got 7-8 will be passives, and the ones who scored 9-10 will be promoters. Those categories will give you a better understanding of your customers and their loyalty to your brand.

After this you can use the formula for the Net Promoter Score – Net Promoter Score = (Number of Promoter Score/ Total Number of Respondents) – (Number of Detractor Scores/ Total Number of Respondents).

Net Promoter Score Impacts Your Team

Businesses that want to grow rapidly pay a great deal of attention to their resources and team members. Team members should work well together and have great motivation. Otherwise, there is a huge chance that whatever they are doing won’t be so good.

Explain the importance of NPS to them, and explain how they can be actively involved in different processes to increase customer loyalty. Trying to improve NPS should be another goal for them.

NPS Can Quantify Word-of-Mouth Traffic

Word-of-mouth marketing itself is very important for companies as another option for free advertising, but it’s mostly done by satisfied and happy customers. So it’s important to determine what gives you a satisfied customer and what makes them promote your brand on daily bases.

Most customers pay attention to what their friends or family members are recommending to them, so it’s important to develop a good word-of-mouth pipeline. Think about how you can improve the experiences of your customers and how you can make your brand more memorable for them.

NPS Measures Your Customer Loyalty

Customer loyalty is hard to measure because it’s constantly changing, but most customers pay greater attention to brands that they are loyal to. In order to have a better understanding of the loyalty of your customers, you can check the repeated purchases as well.

Also, determine what’s your average order value, this way you’ll know approximately how much your customers spend on your products or services. Also, check how many customers left your brand and canceled subscriptions.

To understand more about how to measure your customer loyalty, you can read one of our articles – “How to Measure Customer Loyalty”.

NPS Provides a Benchmark of Customer Quality

NPS can help you to understand more about your customers’ loyalty, quantity, and quality as well. NPS will help you to understand if certain customers are really the ones that you need and if they are suitable for your products or services. Use the information about other factors as well to get a more clear picture, like what’s your customer churn, conversion rate, etc.

NPS Can Identify Areas for Product Improvement

When you are creating a new product, it’s important to know what your customers think about it or feel about it. When you are monitoring everything with NPS you can understand more about the positive qualities of your products and about the negative aspects as well.

You can implement necessary changes from the beginning and don’t delay the improvement of your product. After your customers will provide you with scores, you can ask them additionally why they decided to give you a certain score and understand more about specific aspects.

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How to create a Roadmap for Value Creation?

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How to create a Roadmap for Value Creation?

  • Tags Roadmap for Value Creation, Value Creation

Importance of Value Creation

Nowadays, businesses are more than just companies focused on making profits. They’re creating legacies, they are creating solutions that can improve people’s lives and change the world. The purpose of any business is to create value for customers, investors, and employees. Businesses solve their customers’ problems, that’s how they provide them with value. 

Creating value for customers will help you to sell more products, you can use the same tactic for shareholders as well to benefit more from future operations. You can open up numerous doors for yourself when you’ll have clearly defined steps for value creation.

Look at Value Creation More Broadly

Nowadays, value creation is related to almost everything, like brands, ideas, people, and innovation. So when it’s broadly defined, it can be seen as a better management tool and not for example just as a financial measure of business performance.

When you are creating value for your customers you’ll be able to provide them with products and services which will be very useful for them. While creating value for investors mostly involves delivering high returns on their capital consistently.

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Planning Value Creation Roadmap

First of all, you’ll need to document market requirements, understand more about specific aspects that have emerged there, and how you can use them to your advantage. You’ll need to have a better idea about your products and services as well, like their quality, usability, reliability, etc. Below you’ll see important aspects that will help you to develop a successful value creation roadmap.

Create Specific and Measurable Value Drivers

Value drivers will help you to see all the important aspects of value creation and how they are connected to each other. You can even create a “value driver tree” to see the chain of events that eventually lead you to increased business value. Also, keep in mind that a typical value roadmap always contains these three measures of value, which are growth, cost reduction, and risk mitigation.

Set Realistic and Achievable Targets

In order to have a value-creation roadmap, you’ll need to define what are your high-level goals. Determine where your business is right now and where would you like to be in the future. Your targets should be very clear and realistic as well in order to plan every aspect better. Also, add target dates as well to ensure that you’ll have everything done for a specific time.

Monitor and Measure the Performance of the Value-Creation Plan

You’ll need to monitor each step that you’ll take. See how you are performing and how your value creation plan helped you so far. Check the results after each stage that you’ll be overcoming. Share your plan with your team and always add feedback to make sure that everything is up-to-date.

Understand More About the Value Gap Analysis

Also, keep in mind that you’ll have to do a value gap analysis as well. Determining the value gap is important because sometimes customers expect different products or services, but then have to deal with a completely different reality. There are numerous occasions when products are thought to have better value, but the actual value is totally different.

Dealing with the value gap will help you to have more successful campaigns. You won’t be afraid of underperforming or not performing at all. Conversion rates will be higher and you will have better chances of growing your user base as well.

Executing Strategies for Value Opportunity

Think about at least nine or ten key opportunities, and think about specific programs to drive actions. Link your objectives and actions to the value chain. Develop objectives and strategies that will be able to support your value drivers. Write down everything in more detail.

A list of Supporting Competencies

In the list of supporting competencies, you can include every skill, technology, or process that you can use. Creating a roadmap isn’t easy but with an open-minded team, you’ll be able to clearly see the value that you are providing your customers with or could provide them with in the future. Also, it can become the foundation of your company’s strategies. 

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How to measure Customer Loyalty?

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How to measure Customer Loyalty?

  • Tags Customer Loyalty, Measuring Customer Loyalty

Importance of Measuring Customer Loyalty

It’s one of the most important topics that companies should be interested in. However, there are a lot out there who don’t even know their rate of churn or retention. Not measuring the ROI of customer experience, upsells, cross-sales, or other metrics of customer loyalty could have detrimental results.

Measurement of important aspects is crucial. You should know why your customers like you, and why they are loyal to you. Loyal customers help you to achieve your business goals and help you to progress. There are several essential metrics that you could benefit from.

Customer Retention Rate

Customer retention is about the clients who remain loyal to you. They are very valuable and can help you to gain more customers. In order to determine more specifically what’s your customer retention rate, you can use a formula: [(E-N)/S] x 100 = CRR.

First of all, identify the specific time frame that you’d like to study. S is related to the number of customers that you had at the start of the specific time period. E is about the number of customers that you had at the end of that time period. N should be the number of customers that joined you during that time.

Using this formula will help you to determine what’s your customer retention rate, you can do it on weekly or monthly bases, or even daily depending on what kind of company you have and how frequently you go through changes.

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Customer Lifetime Value

You need to know what the average customer is worth to your business, and there is a formula that could actually give you more clear answers – Customer Lifetime Value = Customer Value X Average Customer Lifespan.

First of all, you need to know what’s the average purchase value and then multiply that number by the average number of purchases, this way you’ll determine the customer value. Then you can multiply customer value and average customer lifespan to discover what’s your customer lifetime value.

Net Promoter Score

Net promoter score is important in order to measure customer satisfaction levels and loyalty, and most of the majority of Fortune 1000 always pay great attention to it. The formula for Net Promoter score is – Net Promoter Score = (Number of Promoter Score/ Total Number of Respondents) – (Number of Detractor Scores/ Total Number of Respondents).

First of all, you need to do a survey. You can do it via social media polls, and emails as well. You have to ask your customers “On a scale of 0-10, how likely are you to recommend us to your friend?”.

Once you collect the answers, divide them into categories. Promoters will be people who scored 9 or 10, passives will be the ones who scored 7 or 8, and detractors are the ones who score between 0 and 6.

Customer Satisfaction

Understanding more about customer satisfaction (CSAT) is very important to have a better idea about customer retention as well. You’ll have a better understanding of the customers and the experiences that they had while interacting with your business, service, or product.

You can do the survey again and ask the customers simple questions. For example, ask them how would they rate their satisfaction with your company, your service, or your product. And then provide them with possible answers, like very satisfied, satisfied, neutral, unsatisfied, and very unsatisfied. Every response will have its own number value.

Customer Effort Score

With a customer effort score (CES) you’ll be able to determine how easily reachable you are for your customers, and how much time and effort they require to use your product and service or find the information that they need.

You can do the surveys again to understand more about this topic, but you’ll need to do it immediately after they purchase certain products from you or use your service to understand everything straight away. A high CES score is a good indication that your customers can reach you easily. It’s going to have a positive impact on your business.

Engagement Rates

When customers have high engagement levels they are most likely to stay loyal to your brand. You can monitor engagement rates by survey responses. Also, you have to know basically how frequently and well your products are used by your customers.

You can check your social media platforms as well to see the number of likes, comments, and shares. See who are more active users, some of them might be active on daily bases, but there are some customers who don’t appear on the radar frequently but are always following you.

Understand More About Your Customers’ Responses

Going through these metrics will help you to measure customer loyalty better. When you’ll ask questions during surveys, delve more deeply into the responses that you’ll be provided with.

If you’ll ask them if they are satisfied with your services and then they’ll answer yes/no, ask them why, or why they decided to give you a specific score. In this case, besides the statistics and actual facts, you’ll be able to get a better understanding of many important topics and will see once more, what your customers really think about you.

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