pres 134 gautam mahajan august 17 2016

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Service Value Creation Gautam Mahajan Founder Editor, Journal of Creating Value [email protected]

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Service Value Creation

Gautam Mahajan

Founder Editor, Journal of Creating Value

[email protected]

• Service innovations improve the quality-of-life of individuals and the wealth of institutions

• Service is the application of knowledge for the benefit of others, …“human-centered value-cocreation systems” in business and society. Service innovations impact individuals and institutions at all levels, from family to community

Value Creation

Executing proactive, conscious, inspired and imaginative actions that Create better gains or benefits for Customers and all stakeholders, including enhanced returns on investment

The role of an executive is to create value, and go beyond being a functional administrator and a efficiency expert

Corporate Service Value Creation

• Service and Value Creation Culture has to run throughout organisation

– Top level led

– Bottom led

• Customer Strategy/Service Strategy

• Customer Centric Circles

Value

• Value for Money

• Money for Value

• How to measure and build value?

• Value is always comparative as perceived by the Customer

Measuring Customer Value

Customer Value Added

CVA = Perceived worth of your offer

Perceived worth of competitive offer

Adding Customer Value

Creates Competitive Advantage!

To measure Relative Value Added we need to

- Measure market perceptions of value we add

- Measure market perceptions of value added by

competitors

- Define a relationship between the two

CVA scores lead Market

Share ! Example from Telecom %age installs

CVA

score

Pts of Share

Year 1 Year 2 Year 3

Value (-4 Mos.)

Market Share (%)

ROI Vs. Relative Customer Value (PIMS Data over 1000 companies)

Relative Customer Value

0

5

10

15

20

25

30

RO

I (%

)

Consumer Industrial Goods

Bottom 20% of

Businesses

Middle 20% of

Businesses

Top 20% of

Businesses

Customer Value and Share Price

• A 1% increase in value or satisfaction

increased share price by 4.6%*

*U of Michigan study

30 (Illustrative Data)

Customer Loyalty Predictor

0

10

20

30

40

50

60

70

80

90

100

1 2 3 4 5 6 7 8 9 10

Customer Value Rating

What is Improvement Impact ?

Predicted

Loss Rate

= 33%

Moving from an

7.0 to an 8.0

would improve

loyalty to 67%

CVA vs. Retention

Profit Impact of Loyalty

5% increase in loyalty

Translates to

25-100% profit increase

Increase in Customer Net Value for 5% Increase in

Customer Retention

0 20 40 60 80 100

Software

Publishing

Office Building Mgt

Life Insurance

Industrial Distribution

Industrial Brokerage

Credit Card

Branch Bank Deposits

Auto Service

Auto/Home Insurance

Advertising Agency

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JCV.SagePub.com