Bain's Framework: Elements of Customer Value

Read time: 4 minutes

Hey there 👋 - it's Brian.

What makes customers value your business?

It's hard since value feels so subjective. But Bain Consulting wanted to find the universal building blocks of what customers value. So they surveyed 10,000 consumers on how they perceive 50 companies. Bain distilled the 10k responses into one framework:

The Elements of Value.

So today, we're explaining the Elements of Value and how you can use it to get customers to crave your solution.

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Customers value different things

Imagine you've never been to NYC and you're walking through Times Square with your closest childhood friend.

You're excited to see the lights. But it's hot. Your shirt sticks to your skin in the blazing heat. The glaring sun forces you to squint. Your friend laughs at you. He remembered his sunglasses. You have a long day of sight-seeing ahead of you.

A vendor approaches you - "want to stop squinting for $5?" He hands you sunglasses. "Of course!" He just solved your pain that would have lasted all day. The blazing sun was getting in the way of seeing the city.

Now imagine your friend's perspective. He's also focused on seeing the city. But since he has sunglasses the sun isn't a problem for him. He doesn't need a 2nd pair to block out the sun.

The vendor understood that you had a "functional" need - to avoid a hassle (block out the sun), and approached you with a solution for your problem. Easy sell!

Imagine if you understood what your customers need and spoke directly to that need. Your revenue would double.

Let's find out what customers value: 👇

The 4 categories of customer value

Ask customers what they want and they give vague words like "convenience." That sounds good in theory, but when it's time to execute, what would you do to make customers perceive your solution as "convenient?"

We'll use Bain's framework to make it actionable, but first, let's introduce the Elements of Value. Each "element" is a fundamental building block of what customers value (e.g., saving time, reducing risk, making money).

The Elements fall within 4 categories:
1) Functional (helps me accomplish a specific task)
2) Emotional (makes me feel a certain way)
3) Life changing (transforms me into a new person)
4) Social Impact (transforms broader society)

Here are the 30 elements:

The more elements customer perceive you have, the stronger customer loyalty and the higher your revenue growth.

Side note for the psychology gurus out there - this pyramid of customer value was influenced by Maslow's Hierarchy of Needs - a pyramid that ranks what humans need to feel fulfilled.

The goal is to have customers perceive you as one of the top solutions for this element. Let's use "save time" as an example. If you save your customers an hour, but your competitor saves them 3 days, customers will perceive your ability to save time as weak.

Being strong in more elements is better (look at the visual below to see the average growth rate of companies with more elements), but it's hard to execute. For context, most businesses only have 2 - 3. Amazon has 8. Apple has 11.

Choose the elements you want to win

Now, remember that customer who said they want you to be more "convenient?" Now that we have these elements, we can use the pyramid to make this feedback actionable.

Looking at the pyramid - which elements make your life more "convenient?"

The elements related to convenience are:
• Save time
• Simplifies
• Avoid hassle
• Reduce effort

If customers perceive you as strong in these 4 elements, they'll perceive your solution as "convenient."

So now let's apply this to your business. Here's what you can do today to make customers value your solution more (to drive more revenue and loyalty).

1) Set up time to talk with your target customer to understand their pain better than anyone else.

Ask the wrong questions and customers will mislead you. Steal these interview questions.

Need answers faster? Here are some alternative ways to understand your customer (from a previous issue on Amazon's customer strategy).

2) Translate your customer's feedback into its core elements.

The words your customer uses will likely be too high-level to be actionable. We need to get deeper to execute on the feedback. Translate what they say (e.g., they want a "convenient" solution) into their actionable elements.

3) Choose which elements of value you'll act on.

Customers need to perceive you as stronger than your competitors to win in an element. You can only choose a few since being the best in an element is expensive and time-consuming. Here's a previous article to help you choose which areas you'll focus on.

That's a wrap!

If you have any questions, reply to this email and I'm happy to guide you.

If you found this helpful, please forward this email to 1 friend or colleague. They'll appreciate you and you'll help grow the community.

See you next Thursday 👋

Brian

Clickworthy Resources

• Bain Elements of Value Interactive map

• Interview: How the elements applies to founders and corporations

• 10 ways to get customer feedback