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September 1997 Volume 2.01
The Value Map Revisited
In the September 1996 CVM News we looked at the Value Map for four
Internet Service Providers. Well, in this market, time certainly
does not stand still and it is time to revisit the Value Map.
A fifth Company, Bondi Internet has now decided there is a dollar
to be made from the Internet. Bondi opened first in Sydney operating
out of a garage near Bondi Beach. They specialise in low quality,
low price service. Although they charge on an hourly basis, they
only charge $1 per hour. They are quite happy to answer the help
phone line when they are not out surfing. Company X has really kept
its service levels and pricing fairly constant over the year. This
has positioned it right in the middle of the Value Map and it has
been able to win customers. Company Z is still limping along. While
many customers have left it during the year, some still haven't
tired of its rude service and strange billing practices. Company
W has been slow to change although it has kept growing and adding
more dial up lines. Company Y has been growing rapidly with its
all you can eatservice. It has just decided to upgrade all of its
modems to the new high-speed models and keep its prices the same.
In addition, it now has so many customers that it is providing a
24 hour help desk service.
Changes like these in the market place mean that positions on the
Value Map will change to reflect the changes in relative position
enjoyed by all of the companies. The Value Map is a zero sum game.
If one competitor improves its absolute performance, then the relative
performance of all the other companies will get worse. On the following
Value Map the old positions are shown along with the new ones (â)
that the changes described would drive.
The beforeand aftercompetitive positions are quite different. Company
W moves further into the low price / low quality position and it
has Bondi as a competitor. X moves into a lose market share position.
Company Z has nearly fallen off the edge of the Value Map, while
Company Y has moved into a strong position to become the market
leader.
Make sure you know what your
customers treasure
Rodger,
Just a note to say hello, and how much I enjoy your newsletter.
Your messages with humour are a pleasure to read.
The following story is true and may be useful to you in making
your points about customer value.
Bill Montgomery
"My neighbour, Mrs. Clause, is a first grade teacher and uses
the coloured star approach to recognising students for their reading
skills and progress. I was quickly reminded as I talked with her,
of my first grade teacher's star board that hung next to the door
of our classroom. The coloured stars formed a pattern that showed
the reading skills progress of each of us during the weeks of the
school year. Each week we had a chance to receive a star, so every
Friday was an exciting day. We all wanted gold because our teacher
said gold was the best. Silver was second best, and red was better
than nothing.
I remember looking across that long white piece of cardboard with
its pencilled lines to see the stars for each student by week. And
looking at the board from across the room showed all the colours
and patterns for our class. The change in the number of stars going
from left to right showed how our class reading skills were improving.
Multiple times a day we passed that star board as we travelled in
and out of the classroom. And several times a year our parents would
see it as they came for consultations or 'open house' at the school.
Frank is a student in Mrs. Clause's class who, from the beginning
she told me, was going to be a solid gold reader. He loved to read
and had the earliest gold stars on the star board. After several
weeks, however, he had a straight line of blue stars and Mrs. Clause
had tried several times to pull him back up. Frank would refuse
to read some parts of a page, and he said that he did not know words
that Mrs. Clause said he surely must have known. He had slipped
from gold to silver, and then blue. Further, he stayed just at blue,
not up to silver, and not down to no star at all -- just blue.
She told me that the learning point came for her when she changed
her approach with Frank. Rather than trying to correct his behaviour,
or help him along, she said to him out of frustration "Frank,
I do not understand why you are getting blue stars instead of gold!"
Frank had an answer for that. He said, "I like blue stars the
best." Mrs. Clause said to me, she has rarely learned so
much in so little time. She said that she realised how infrequently
she has treated her students as customers. She rarely asked them
what they would like to have. Since that conversation with Frank,
she has asked each student what colour they prefer and has explained
what skills will earn them that colour. Now Frank is reading at
a gold level, and receiving his blue stars. Some first graders even
added red."
Regards,
Rodger Gallagher
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