Entrepreneurship – from ideas to reality
Entrepreneurship – from ideas to reality

Start this free course now. Just create an account and sign in. Enrol and complete the course for a free statement of participation or digital badge if available.

Free course

Entrepreneurship – from ideas to reality

2.1 Dimensions of value

Figure 2 shows one way of looking at how, as you think about your own business idea, you might increase value for customers across four dimensions.

Described image
Figure 2 Dimensions of value (adapted from Parvatiyar and Seth, 2001)

Strategic value

The more aligned you are with your customers’ needs and wants, and the more relevant a place you have in their lives, the more likely you are to succeed. That means that your values, brand, ways of working and of course the product itself are a good fit with your target audiences.

Economic value

For your business, economic value means being able to achieve a price that exceeds the cost of providing the product or service being offered. This requires efficiency in the costs associated with sourcing and providing products and services, and serving and supplying customers. From the customer point of view it means paying a price they think is worth paying and that the value you offer is worth paying relative to alternative solutions to their need or the problem you are seeking to solve.

Operational value

Your customers will come into contact with your business in a variety of ways – sometimes referred to as customer touchpoints. Wherever and whenever they touch your business, there is an opportunity to reinforce the value of what is being offered (and if you think about it, also to detract from the value in the case of poor customer service). In today’s world where people are considered to be time poor, this means making it convenient and easy for customers to deal with you.

Reflection

Timing: Allow about 5 minutes

Take a moment to reflect on how many suppliers or providers you deal with as a customer. How do they perform on this dimension of being easy to deal with? What is it they do – or even don’t do –that makes dealing with them good or bad?

To use this interactive functionality a free OU account is required. Sign in or register.
Interactive feature not available in single page view (see it in standard view).

Discussion

You may have thought of the opening hours, or convenient location, or even an option for self-service which means that you can deal with suppliers at the time best suited to you. You may also have thought about efficient processes – for example, you are ‘remembered’ as a returning customer and so don’t have to provide all your details or repeat your request. Or perhaps you appreciate the recognition or rewards for your loyalty which means that the company uses the data and information you have provided to good effect.

There are many ways to set up your organisation to provide a smoother, more effective experience for customers that not only add value to customers but differentiate you from others.

The whole banking industry has been turned upside down by the introduction of mobile banking and indeed it has attracted many new businesses into the sector, many of whom are not banks. Think of companies like Apple (with Apple Pay), and Amazon and Alibaba – both online retail companies –that have revolutionised how you pay for goods and services at the touch of your smartphone. You can move money around, pay for things, receive money, exchange it for other currencies and even use cryptocurrencies as a result of technology. The convenience of apps and cashless payments is for many people (customers and traders alike) infinitely more secure, efficient, convenient and cheaper than visiting a distant physical branch to make a deposit, withdraw cash, pay cheques in or exchange money. However, even with banking there are some transactions where the human touch is preferable to dealing with technology.

One further example of adding value and differentiating your business from others comes from how you and your staff behave to add value through the experience.

Behavioural value

You can probably remember occasions when the service of a member of staff in an organisation has left a good or bad impression. You will probably also remember how it made you feel – anything from satisfaction to delight to frustration and annoyance. The point is that for most businesses there is a real benefit to encouraging customer satisfaction and even delight. For one thing, happy customers come back, but moreover, delighted customers will tell other people.

The flip side to that is that unhappy customers tend to be more vociferous in telling people about bad experiences. In the interests of retaining customers and growing your business it pays to be attentive to customer expectations and the customer experience.

Next you will look at ways of optimising value for your business.

ENT_1

Take your learning further

Making the decision to study can be a big step, which is why you'll want a trusted University. The Open University has 50 years’ experience delivering flexible learning and 170,000 students are studying with us right now. Take a look at all Open University courses.

If you are new to University-level study, we offer two introductory routes to our qualifications. You could either choose to start with an Access module, or a module which allows you to count your previous learning towards an Open University qualification. Read our guide on Where to take your learning next for more information.

Not ready for formal University study? Then browse over 1000 free courses on OpenLearn and sign up to our newsletter to hear about new free courses as they are released.

Every year, thousands of students decide to study with The Open University. With over 120 qualifications, we’ve got the right course for you.

Request an Open University prospectus371