Networks of learning and networks of products
Products that are manufactured in the same way and with the same product features are often used differently by different customers. Just because a product is a commodity doesn’t mean that customers can’t be diverse in their needs and the way they use the product.
Companies used to have no mechanisms for connecting with the end users in order to understand and influence this. Social media and mobile technologies are now changing the model.
The relationship between a customer and an enterprise can get smarter with every interaction. Consider a service as routine as grocery shopping. Suppose that you could turn to your mobile phone and come up with a graph of last month’s or last year’s grocery purchases. Every time a customer buys her groceries, she is not only showing herself and the firm the products she buys, but also teaching the firm the pattern with which she consumes/uses them and implicitly the complementary products she perhaps does not yet know of. The service is creating a history of this particular customer that is virtually impossible for a competing shopping service to replicate.
Interactive value creation is about two new capabilities: the firm needs to be capable of networking with individual customers, and behaving somewhat differently towards a particular customer on the basis of communication and learning.
If a firm wants to create learning relationships with its customers, it must first create links to end users. The starting point is not a company site any more. Linking needs to start from where the people already are and what they already do: the main starting/connecting points are social media platforms, stores and ads. Also every product needs to be seen as a network node. By listening to customers individually, interacting with them, and then treating different customers differently, the modern retail firm can change the nature of competition and generate customer loyalty as well as higher unit margins.
What often happens is that enterprises view customers through the lens of a fairly uniform set of products leading to their seeing customers as having relatively uniform needs. But even commodity products are always a bundle of use contexts, buying patterns, complementary goods and delivery options.
A product or a service should be pictured as a node in a network with links to ancillary services and complementary features surrounding the product. The more relevant links are considered, the richer the product will become. The task is to visualize the product in the broadest sense possible.
As the customer’s need set is expanded beyond a single item, the definition of the product changes and becomes more complex. The more complex the product, the more possibilities there are for the company to remember something that will later make a difference. When a customer teaches a firm what she wants or how she wants it, the customer and the firm are cooperating on the sale of a product. It is about interactive value creation.
A learning relationship ensures that it is always in the customer’s self-interest to remain with the firm that developed the relationship to begin with. Loyalty then creates more value and is more convenient than non-loyalty.