National Clothesline

Delivering value for customers should be regarded as your best source of competitive advantage.

After all, the main responsibility of drycleaners is the delivery of quality service to customers. Because drycleaning has become highly competitive, to be successful in this industry drycleaners have to provide superior customer value and it has to be done continuously.

Any service can be viewed from two different perspectives: that of the service provider and that of the customer. As you might expect, these perspectives will differ. Some customers might view drycleaning as being relatively unimportant while others view it as critical.

Let’s take a look at customer value as seen by the drycleaner and also as seen by the customer.

Many drycleaners may consider customer value to be an abstract term because it can be interpreted differently by different classes of customers. It is usually defined in one of four ways:

• Value is what the customer gets for what they give.

• Value is the quality that the customer receives for the price paid.

• Value is whatever a customer gets from a service.

• Value is low price.

In many ways, customer value is a judgment call. It is the customer’s assessment of what has happened (benefits and sacrifices). That is, it is the customers’ interpretation of how they feel about your service, relative to the sacrifices they have to make: generally, price and time.

The common theme here is that there are “trade-offs.” Trade-offs are the difference between benefits and sacrifices. In other words, customer value is created when the customer perceives that the benefit of using your service exceeds the sacrifices.

I like to view customer value as a trade-off between total perceived benefits and total perceived sacrifices. I use the word perceived because the value judgment is dependent on the consumers’ experience.

The components of customer value for drycleaners are: reputation for quality; value for money; and prestige.

Reputation for quality involves quality and reputation and, to some extent, emotional value.

Value for money is the comparison of the benefits and sacrifices.

Prestige involves the social value of patronizing a service that “important others” think is a quality drycleaner, i.e., keeping up with the Joneses.

Delivering superior value to customers is important for your business success. The source of superior customer value comes from your own organizational capabilities, such as human resource management, implementation of innovations, management structure and your own attitude toward customers in general.

Providing superior customer value has a positive impact on both customers and employees. Superior customer value results in superior financial performance, customer satisfaction and increased customer loyalty. Satisfied customers are more likely to repurchase your services and spread positive word of mouth.

For management, customer value has to be planned for, resources allocated, and personnel put in place to implement the plan.

For the customer, value is an experience and is generally a trade-off between benefits and costs.

There are differences between management’s idea of customer service and what customers actually experience. The difference is due to the fact that, for drycleaners, customer value is the product delivered to customers, while for the customer the entire service is an experience.

Another source of difference is communication. Drycleaners may try to convey a specific image and raise a certain level of expectation, however, without careful analysis, they may be giving the wrong message to their customers.

Some customers will always associate value for their money with discount drycleaners and, to some extent, standard (mid-priced) drycleaners, but not with premium drycleaners. However, more and more customers are realizing that they can receive superior value at premium drycleaners, compared to standard drycleaners and discount drycleaners.

Value for money perceptions are significantly different between drycleaners and customers at all three levels: premium, standard and discount. Contrary to what you might expect, value for money is generally over-rated by drycleaners and under-rated by customers at every level.

It’s becoming clear that customers think discount cleaners only deliver what they expect; and nothing more. On the other hand, drycleaners, who run discount operations usually think they are providing customers with more value than customers are paying for. From their perspective, customers are seen as more demanding relative to what they are paying.

For standard drycleaners, the gap between their perceptions and the customers’ value for money is narrower than for discount cleaners. Standard drycleaners still over-estimate the value they deliver, and customers perceive they are receiving less than they were promised. Standard drycleaners believe they are delivering as promised and customers experience this as being less value than they are paying for.

I’ve said for many years that the least desirable position for any drycleaner is in the middle (standard). If that’s where you’re positioned in your market, start your move, now, to either being a premium drycleaner or a discount drycleaner. Those are the only safe positions. Unfortunately, either of those will require considerably more effort.

Premium drycleaners think they are delivering superior value and customers in general agree they are receiving superior value relative to customers that patronize standard and discount drycleaners.

In all cases, probably as expected, drycleaners believe they are delivering higher customer value than what customers are actually experiencing.

Customers are increasingly more demanding and expect superior customer value, even at lower prices. This is a result of the high competition among drycleaners and the availability of alternatives.