Understanding the idea of value also involves understanding the ways in which value unfolds, clearly and dichotomously, in our experience we have found that we can divide value into two strands: Tangible and Intangible
By tangible we mean all kinds of values that we can account for and have physical form: Market value, return on investment, material goods, profit margin, etc. By intangible values we mean those that have no physical form, common examples are: brand, organizational culture, and intellectual property and relationships.
It is common that leaders do not understand or have difficulty understanding values that are intangible to the organization. Therefore, as much as possible, one should seek ways to make the latter tangible. Examples of indicators that provide such capacity:
NPS - Net Promoter Score = demonstrates how satisfied and loyal the customer is with your product/service, or how much he is a fan;
CES - Customer Effort Score = demonstrates the customer's level of effort with your product/service;
CEV - Customer Emotional Value = demonstrates the customer's level of emotion with your product;
CSAT - Customer Satisfaction Score = Used to measure customer satisfaction in a purchase/service journey;
A brief explanation of each one:
CSAT - Able to measure the level of satisfaction in a "buying" journey. It is a technique for measuring short-term experience, measuring not only satisfaction but also customer loyalty, and is based on criteria defined by the company itself - what it wants to measure. The measurement scale can be perceptual or numerical.
NPS is based on a single question, usually of the type: "On a scale of 1 to 5, how likely are you to recommend this service to a friend? Such a technique also uses a scale to make the measurement and classifies opinions into : Promoters, detractors and passives, the opinion of the latter being disregarded for calculating the score.
The CEV measures the irrational part of the experience. The index can be divided into: sad and happy, disappointed and delighted, insecure and safe, disrespected and respected, distant and close (opinioninbox.com, 2018).
CES, on the other hand, is Similar to CSAT, however the focus is to understand the effort expended by the customer during their interaction with the supplier. Degree of satisfaction ranges from Not very easy to very easy.
Another form of analysis, also known and disseminated is Servqual, which has a big focus on the fifth quality gap, but we'll get to that in a moment.
When we started the value office, we had a maxim that we used every time we were going to map a new value stream: "if you're looking for value, start with pain." It's a logic that stems from the Lean practice of "cutting through the waste."
One of the ways we used to generate data and ideas for ourselves about the way we provided service was by looking at the 5 quality gaps. This method was created by Parasuraman (Parasuraman ET AL., 1985), which we have adapted in the image below (and the story) to explain in a more didactic way.
Each Gap (hole) referred to a difference between expectation vs. reality encountered by the customer in the service.
The first Gap occurs when the service managers, or sales team, fail to understand the expectations that the customer already brings with them. A fine example of this is the famous "silver bullet" of project offices and consultancies that solve any problems.
The second Gap occurs when the service is specified differently from the customer's expectations. Here is a clear example of the lack of quality in the specifications, it's like ordering a cable TV and internet service, and then having the order to install only the internet.
The third is when the service provided does not match the service specification. It is like contracting accommodation in a 5-star hotel, and when we get there we find out that the place is actually a hostel.
The room refers to how the service was provided and how the client was communicated these services. It is like calling the computer technician to upgrade your computer, when all he did was update your web browser.
And the fifth and last one is the customer's expectation versus his perception of the service. It is like going out to dinner in a famous restaurant, only to find that the food tastes the same as the lunch boxes you make at home.
Of course, these are just simplifications; the model is more extensive and complex than that. Parasuraman's own formulation does not have tools for the gaps, and the author himself proposes in another study a tool for the fifth gap: the Servqual model.
For the other GAPS, the CEV, NPS, CES, and CSAT indicators can be used to identify customer pains in each phase of their experience, and, based on these pains, propose solutions that can solve the problem.
In our experience we have noticed that measuring the irrational part (CEV) of the experience can be very useful to solve problems related to the first gap, since the customer will bring expectations that are alien to the service.
CES, on the other hand, can have a good application in the second gap, demonstrating how much effort your customer felt between understanding their expectations and the settings that were made for service delivery. If your system is bureaucratic to begin with, if your customer is keen on a range of information, this is a good way to identify it.
The third Gap, on the other hand, can be addressed by measuring customer satisfaction about their own journey, using CSAT. Finally, the fourth gap is well covered by the NPS, once the service has been provided.
Each of these indicators will feed your team with rich data about how your company is performing in front of the customer, and is intrinsically linked to the quality of the final product/service.
We already know that the world is changing, we are leaving the silos between projects and operation, and we are understanding these activities as intrinsically linked. Understanding the concept of value, and being able to identify it in your customer's journey, is crucial to understanding the best way to meet their needs.
The gap analysis model can be used both at the organization level, i.e. of your product/service with your customer, and with the departments and the way your company provides service internally, it is an important tool to identify intangible points of value of the service provided, focusing not on the service, but on the experience that is being offered.