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BlogCreate Maximum Value For Customers: Value Chain Analysis

January 3, 2017

Wow Customers And Make More Money

I talk to my clients a lot about adding value to their customers and creating a “wow” experience for them. To determine how you can actually create this wow experience I use Value Chain Analysis which is a tool that helps me work out how to add the greatest value to customers.  Many of my clients own service businesses and don’t manufactumoremoney 300x200 - Create Maximum Value For Customers: Value Chain Analysisre widgets. They don’t have a final product to hand people. Instead, they give time, experience, knowledge, and other services to their customers. As a business mentor, I tell my clients that to be highly paid they must create maximum value for their clients.  I also stress they do the same with their employees and their vendors.  All of this is being a Heartrepreneur™.

When I first bring this concept to a client they guess where they can create value and this is where I bring the Value Chain Analysis tool. The tool helps us identify ways to create value and then we can strategize to wow customers and employees and vendors.


Value Chain Analysis

valuechainanalysis 200x300 - Create Maximum Value For Customers: Value Chain AnalysisJust what is value chain analysis? It is a process of three steps. Step one is looking at the activities that help you deliver your service (or product), step two is looking at each activity to determine how to add more value to your customer, and step three is evaluating what changes to make and then creating your action plan to make your changes. This is my value chain analysis definition. Let’s look at exactly what is a value chain analysis. A value chain is a set of activities that an organization carries out to create value for its customers.A value chain is activities that a company does to create more value for customers. Michael Porter introduced the concept in 1985. Porter’s value chain analysis is a way for companies to examine the activities they conduct and how they create value for customers while looking at costs and profits. Value Chain Analysis Porter’s way is the model I use to create my own interpretation to wow my customers of my client’s. The way in which value chain activities are performed determines costs and affects profits, so this tool can help you understand the sources of value for your organization.

Value Chain Analysis: Realtor

houseforsale 300x225 - Create Maximum Value For Customers: Value Chain AnalysisLet me share a value chain analysis example to help you better understand the concept. I’ll use a client who is a realtor. We first looked at the activities my client was conducting and how those business processes were able to create a wow customer experience. We looked at everything from marketing, talking on the phone, contracts, showings, communication, support, and on and on.  We broke down everything the realtor did and their team did and even looked at systems and technology and also conducted customer surveys to get their feedback as well. We had a lot of huge post it note boards all over the conference room with this information.  Next, we looked at every activity we had written and rated how much value it really created and if it made sense financially and was really a wow. We brainstormed and determined what needed to be changed or added to for bigger wow factor and enhanced value to the customer. We picked items that were easiest to implement and that would not cost a lot of money and that would have more than minimal wows.  We picked actions that would really create a big wow and we could quickly put in place without a ton of cost.  We prioritized these and then rolled them out.  I provided the client with my own value chain analysis template to follow as we guided this session.

The result? My client has a system in place now to deliver wow value and world class service to her customers who enjoy the experience of having her as their realtor more and my client has systems and processes in place that actually wow her clients and her employees as well.

Value Chain Examples: Large Retailers

walmart 300x142 - Create Maximum Value For Customers: Value Chain AnalysisLet’s look at how some bigger businesses use value chains.  One company worth nothing is Walmart. Briefly, Walmart value chain analysis led to their ability to have huge purchasing power and to drive down costs from their suppliers. Walmart is focused on continuous improvement and learned how to use technology to quickly capture more e-commerce. Looking at value chains helped them save time, create cost-effective inventory management and high customer satisfaction and brand loyalty.

Starbucks value chain analysis revealed they select the finest quality coffee beans and roast and package their own beans. Starbucks has superior products and very high customer satisfaction and does product launches by in-store sampling.  They seek to create an in-store wow experience for their customers.  The stores serve as office and meeting places and create a culture for their customers to experience their products.  By paying attention to what was giving them a competitive advantage and whstarbucksvaluechain 300x199 - Create Maximum Value For Customers: Value Chain Analysisat was not increasing their market lead and customer satisfaction Starbucks’ used the concept of value chain analysis to enhance the wow experience and create greater profit margins.

 And finally, let’s look at Apple Value Chain Analysis.  Apple is one of the few companies that has a loyal fan base that craves their new releases and almost has a cult-like status with people lining up for their latest iPhone or iPad.  Why has Apple been at the top in this area? Apple clearly understands their value chain. They have become known for exceptional customer service from pre-purchase to purchase and to post purchase. People have fallen in love with Apple and the brand has a deeply loyal following.  Apple has paid a lot of attention to their value Applestore 300x185 - Create Maximum Value For Customers: Value Chain Analysischain and made adjustments in marketing, service, operations and supply based upon their value chain analysis.

What needs to happen in your business now?  How can you improve your customer’s WOW experience?



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