STRATEGIC VALUE ANALYSIS ^TM NEWSLETTER

Element #4: “A Value Analysis Program Must Be Customer-Centric”

(Part 5 of 6)

If you honestly look at all of the products, services, and technology that you are buying today (whether it is for your personal use or your healthcare organization) one truth stands out: that most manufacturers and distributors believe in the philosophy of “One-Size-Fits-All”.  Thus, these groups of sellers have adopted a profit-centric model vs. customer-centric model to sell you their wares.  That’s why you can’t find any E-width in shoes in any store, you are buying  pacemakers that are too feature rich, and are making do with plastic trash liners that don’t fit your wastebaskets.  

Another profit-centric philosophy that has come of age at most sales organizations is a formula to determine what a customer’s business is worth over a lifetime or “life time value (LTV)”. The result is that, if the cost of doing business with your healthcare organization costs your manufacturer or distributor more than your LTM, then “Via Candia Baby”. 

For these reasons and many others, your value analysis program must be customer-centric. With few exceptions, your manufacturers and distributors aren’t customer-centric thinkers, but are profit-centric thinkers, which often leads to conflicts in your buying process. Only you and your value analysis team can level the playing field by integrating customer-centric behavior into your value analysis process.

  

Figure 1: 5 Value Analysis Mission Critical Elements

Team-Based

Technology Driven

Customer Centric

Strategic Planning   Driven

Value-Based

 

For a value practitioner, being customer-centric means meeting your customer’s functional requirements exactly and reliably (through customization, not standardization) at the lowest possible total cost. This is the fourth element of the 5 mission critical elements to move you to the next level of non-salary performance (figure 1). Your value analysis program must be “customer-centric” to be successful.

 

CUSTOMER-CENTRIC: Easy To Say, But Hard To Do!

“Customer-Centric” is easy to say, but hard to do. The easiest way for value practitioners to remember what it means to be “customer-centric” is to keep in mind that value analysis begins and ends with your customers. It requires understanding your customer’s true functional requirements by observing, shadowing, listening, and empathizing with their wants, needs and challenges. You must measure  their customer satisfaction, and address all of their issues fully and resolve them quickly, easily and completely. Then, once you have built an open and honest dialog with your customers about their functional requirements, you can assist them in  the redesign and reinvention of their products, services, or technologies under investigation.   

 

Four Keys Factors In Developing Customer-Centric Behavior

As you move forward in the design of your customer-centric value analysis program, I would like to suggest four key factors that should be integrated into its design:

1. Customer intelligence: utilize your purchasing and utilization data to drill down to identify favorable and unfavorable trends and practices.

2. Stratification:  rank, value, and prioritize customers’ functions (primary, secondary and aesthetic) by their order of importance, so you can negotiate with your customers for the first time on what they  absolutely, positively must have to meet their requirements.

3. Customization:  customize all products, services, and technologies to your customer’s exact requirements.                                                          

4. Measurement: measure your current customer’s satisfaction and future satisfaction as you redesign and reinvent their products, services, and technologies.

 

By building on these four factors with your own insights into how to understand and measure your customer’s wants, needs and desires, you will make a great leap forward with your value analysis program and your customer’s satisfaction too. 

 

Click Here to View Part - 4 of this Series

Click Here to View Part - 3 of this Series

Click Here to View Part - 2 of this Series

Click Here to View Part - 1 of this Series

Click Here to Access the NO Obligation Free Non-Salary Survey to find out what your savings opportunities are for your organization.