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Driven by more demanding customers, global competition, and slow-growth economies and industries, many organizations search for new ways to achieve and retain a competitive advantage. Past attempts have largely looked internally within the organization for improvement, such as reflected by quality management, reengineering, downsizing, and restructuring. The next major source for competitive advantage likely will come from more outward orientation toward customers, as indicated by the many calls for organizations to compete on superior customer value delivery. Although the reasons for these calls are sound, what are the implications for managing organizations in the next decade and beyond? This article addresses this question. It presents frameworks for thinking about customer value, customer value learning, and the related skills that managers will need to create and implement superior customer value strategies.
We are witnessing an amazing transformation in organizations. Driven by more demanding customers,' global competition, and slow-growth economies and industries, many are on a journey, searching for new ways to achieve and retain competitive advantage. Nearly two decades ago, quality management became popular, and managers learned how to improve the quality of both their organization's products2 and internal operations processes. These efforts brought important performance improvements (Garvin 1983; Leonard and Sasser 1982), but, ironically, too often they reinforced an internal orientation. Most quality tools help managers make internal process and product improvements.
Managers have been implored to consider their customers when determining which improvements are needed, and customer satisfaction measurement (CSM) has emerged to bring the "voice of the customer" into quality efforts. However, application of CSM has fallen short of its promise for several reasons. First, many organizations have responded by setting customer satisfaction goals and strategies, but only a few have rigorously measured their customers' satisfaction (Dutka 1994). Second, even those companies that measure satisfaction may not act on the results (Dutka 1994). If CSM is not backed up with indepth learning about customer value and related problems that underlie their evaluations, it may not provide enough of the customer's voice to guide managers in how to respond.
Third, as experience has grown with CSM, organizations have noticed problems. Sometimes satisfaction data do not correlate highly with organizational performance, as indicated by customers who say they are satisfied but buy elsewhere (Jones...