Use this framework to lock in customers and give them more value
Many business frameworks argue that there is an evolutionary cycle. We recognise the evolutionary cycle in human life. There is an obvious sequence from youth, to maturity and old age. The customer activity cycle identifies phases during which customers think and behave differently about the products they buy. Recognising these differences over time can be helpful in identifying how customers perceive value in the products they buy.
Sandra Vandermerwe is a professor of marketing at GIB Business School in Pretoria and Imperial College Management School in London. In 1993 she wrote an article in The Columbia Journal of World Business that introduced the concept of the customer activity cycle. By identifying points in the customer activity cycle it is possible for a company to provide customers with more value.
The concept of the customer journey is well-known to devotees of frameworks. The customer journey map takes us through the major stages the customer goes through in the life-cycle with a supplier. Sandra Vandermerwe was one of the thought leaders on customer journeys, viewing the path as a cycle during which the supplier seeks to lock in the customer and create as much value as possible.
Professor Vandermerwe refers to the example of Baxter Health – a company that makes dialysis bags for people with kidney problems. In this mature market the company was under pressure to reduce the prices for its bags. This it did. However, through an analysis of the complete cycle of diagnosing and treating renal ailments, the company was able to add services, capture value, and lock in its customers.
The starting point of the customer activity cycle is to identify key moments of truth at different stages. The PRE stage is all about recognition and choice. The DURING stage is when things happen and purchases take place. The POST stage is important because the supplier stays with the customer, understanding their needs and developing solutions to satisfy them.
This can be illustrated with two diagrams. The first one shows the customer activity cycle and the second one shows how value can be added at different stages of the cycle (see the text in the lower diagram).
Key to this framework is walking in the shoes of the customer. The supplier needs to be "person focused" so that the offer can become very personalised. Technology has a large part to play in ensuring the smooth delivery of products and services throughout the cycle and adding value with innovative and swift responses.
Some things to think about:
Who are the end users of your products or services?
What do you know about the engagement of your offer with end-users in the PRE stage (when they are deciding what to buy), the DURING stage (when they are making the purchase), and the POST stage (when they are using the product)?
In each of these stages, what attributes of your offer are used and valued by end-users?
What attributes of your offer are not used am therefore junk to end-users?
How can you change or add to your offer to make it more appealing to end-users at different stages of the activity cycle?