Value In The Experience: The Next Source For Compelling Value Propositions
Customer value is seen as the major source of competitive advantage. Organisations constantly explore to create an enhanced understanding of the holistic value creation process. In order to fully comprehend this concept, that is difficult to grasp, organisations should focus on ‘value in the experience’; both reflectively experienced as well as unreflectively experienced by customers. This article explores this new concept and offers organisations possibilities to improve their understanding of the customer’s value experience. As a result, organisations are able to create stronger and more sustainable value propositions.“The current article is an opening in research into value in the experience. The findings of this research will be presented by the authors Yasin Sahhar and dr. Raymond Loohuis at the beginning of June at the Naples Forum on Service in Italy. Therefore, this research is still work-in-progress and the upcoming findings will be uncovered in the next series of The Next Quarterly in Autumn.”
Value in the experience offers an enhanced understanding of customer value
Customer value has been considered as the major source of competitive advantage for organisations. This ‘outward orientation’ renders organisations with an enhanced comprehension of customer needs. As such, organisations are able to better adapt themselves to these needs.
To date, value has been approached from a rationalistic point of view. This perspective puts ‘what goes on in the mind of the customer’ (i.e. customer perceptions) central in understanding the concept of customer value. Customer perceptions are the source for companies that tells them what customers appreciate and what they do not appreciate about the company’s offering. However, perceptions only focus on what customers consciously/reflectively experience and not on what they unconsciously/unreflectively experience. As such, perceptions do not sufficiently tap into the whole value experience. Therefore, a richer comprehension of customer value that delves deeper into the customers’ lifeworld (the context in which the ‘lived experience’ of customers is grounded) is needed. This yields organisations a view on ‘value in the experience’.
Characteristics of value in the experience
Value in the experience is a subjective phenomenon arguing that value is directly or indirectly experienced by customers in their lifeworld context. Value thus resides not from the object of consumption but in the experience of consumption (also known as value-in-use). In this regard, value has several premises. First, value can be individually intrasubjective (experienced by the individual) or collectively intersubjective (experienced at a collective level). Second, value in the experience is lived or imaginary. Where the former refers to experiencing a product or service through direct interactions, the latter is concerned with indirect interactions with the product or service. Third, value is temporal in nature meaning that it is based on previous, current or imaginary future experiences. Finally, taking into account that value is idiosyncratic, experiential, contextual and meaning-laden in nature, value in the experience emerges from the individually determined context.
Illustrating reflective and unreflective experience through the iceberg metaphor
Based on the previous reasoning that perceptions only elicit reflective experience, recognising the concept of value in the experience is of crucial important for organisations. To further illustrate this, the following metaphor is used (see Figure 1). Customer perceptions solely render a view about the reflective experience of customers – the ‘tip of the iceberg’. Value in the experience covers both reflective and unreflective experience and as such ‘goes under water’.
“Value in the experience covers both reflective and unreflective experience and as such ‘goes under water’.”
Figure 1 – Illustrating value in the experience through the iceberg metaphor
What the doorknob teaches us about unreflective/reflective experience
For the sake of clarity and to make value in the experience more straightforward to understand, the following example is used. A doorknob is an object that is used in everyday practice. It is for example used to enter another room or open a closet’s door. People do not consciously think about turning the doorknob to enter the other room and value experience as such remains unreflective. The doorknob participates in the value creation process in a way it allows people to enter another room or pick something out of a closet. This case illustrates unreflective experience since subjects are not aware of consciously creating value. This is different when the doorknob blocks or is broken. In such instances, people become aware (i.e. reflective experience) of the situation. They are not able to enter the other room or open the closet and the process of value creation is blocked because of the doorknob’s malfunctioning. This situation describes reflective experience since people are consciously experiencing a product/service. What further (managerial) implications of this notion are, is to still to be explored and will be unravelled in the next series of The Next Quarterly.
Offering stronger value propositions
In order to have a full picture of the customer value experience, it is imperative for companies to recognise both sides of the coin: on the one hand the reflective experience of products/services and on the other hand the unreflective experience of products/services. Managers ought to broaden their view of customer value experience to draw conclusions on what customers’ needs are. Not just the core values and lived experience of customers are important, also observations that capture social experiences are necessary to successfully co-create suitable value propositions. Since the Service-Dominant Logic (find out more about this new marketing paradigm here) points out that marketing is not so much a function of the marketing department but the primary function of the enterprise, different departments should be involved in observational research. Not just marketers or sales managers, but also customer service representatives can contribute to the organisation’s understanding of the customer’s value experience. Through using observation techniques in customer’s usage process of products/services, both information about reflective and unreflective value experience can be elicited. As a result, companies are able to offer value propositions that better resonate with customer needs.
This article is the second in the series of the Value Proposition Research Program. For further information on the Value Proposition Research Program, please visit our website.