A Shortcut To Figuring Out What Consumers Value

Which elements will boost the perceived value of a product or service? My colleagues and I have mapped out a useful shortcut by identifying 30 universal building blocks of value that address four kinds of needs among consumers.

Larger companies find it difficult to consistently succeed in generating new products or adding features to existing products. Typically, teams go through countless ideation sessions that start with a clean slate and consume many frustrating hours debating how to connect with consumers in new ways.

Obviously, managers don’t want to spend time and money adding features that consumers don’t care about. But exactly which elements will boost the perceived value of a product or service? A shortcut to understanding that would be welcome.

My colleagues and I have mapped out a useful shortcut by identifying 30 universal building blocks of value that address four kinds of needs among consumers: functional, emotional, life changing, and social impact. For example, functional elements include such benefits as saving time, reducing risk, and organizing.

We tested whether these “elements of value” can be tied to company performance—specifically, to customer relationships and revenue growth—by surveying more than 10,000 U.S. consumers about their perceptions of more than 50 U.S.-based companies. We found that high scores on multiple elements correlate closely with customer advocacy and with higher and sustained revenue growth. We also learned how the elements translate to successful business performance by identifying three important patterns:

1. Some elements matter more than others: Across all the industries we studied, the element of quality affects customer advocacy more than any other element. Products and services must attain a certain minimum level of quality, and no other element can make up for a significant shortfall on this one.

After quality, the critical elements depend on the industry. In food and beverages, sensory appeal, not surprisingly, runs a close second. In consumer banking, providing access and heirlooms (a good investment for future generations) are the next-most-important elements. The broad appeal of smartphones stems from how they deliver multiple elements, including reducing effort, saving time, connecting, integrating, variety, fun/entertainment, providing access, and organizing.

2. Consumers perceive digital firms as offering more value: Well-designed online businesses make many interactions easier and more convenient. Companies that are mainly digital thus excel on saving time and avoiding hassles.

3. Brick-and-mortar businesses can still win on certain elements: Retailers with physical stores can win on some emotional and life-changing elements. For example, they are twice as likely as online-only retailers to score high on badge value, attractiveness, and affiliation and belonging. Consumers who receive help from employees in stores give much higher ratings to those retailers, and these emotional elements have probably helped some store-based retailers stay in business.

Companies can improve on those elements that form their core value, which will set them apart from the competition and better meet their customers’ needs. They can also judiciously add elements without completely overhauling their products or services.

If a company trails in the most important elements, it should improve them before attempting to add new elements. One large consumer bank found, through consumer surveys, that although it fared relatively well on avoiding hassles and saving time, it needed to improve on quality. The low quality ratings stemmed from defects in the bank’s antifraud operations and its mobile app, so it focused on improving both areas.

To explore where investments in products and services will resonate with consumers, executives will still need to run ideation sessions, interview current and prospective customers, and test their prototypes. But the process goes much faster and has higher odds of success when they start with a playbook composed of the elements of value.