Rotman Management — Spring 2017

92 / Rotman Management Spring 2017

Smartphones deliver on multiple elements of value

in a way that is unprecedented in business history.

You have said that the relevance of the 30 elements var-

ies according to industry and demographics. How so?

We did a number of analyses to determine which of the el-

ements was driving an organization’s Net Promoter Score

(NPS) — the widely-embraced measure of customer loyalty

that Bain’s Fred Reichheld developed 10 years ago. Today,

NPS is used by thousands of companies as a simple and ef-

fective tracking mechanism for loyalty and advocacy.

In virtually all of the industries where we conducted

analyses, quality was the number-one driver of NPS. We

believe that likely stems from the Total Quality Movement

that started almost 40 years ago. There has been so much

improvement in product and service quality in recent de-

cades that if you are not delivering a certain level of per-

ceived quality, you probably can’t make it up with other ele-

ments of value. Quality has become almost ‘table stakes’, if

you will.

Then, in various industries, things start to diverge. For

example, in credit cards, the next element that drives value

after quality is rewards me. A lot of credit cards provide re-

wards, and that is now appearing as a driver of loyalty. Avoids

hassles and provides access follow after that. If you compare

that with an industry like grocery, after quality, variety is

very important, along with sensory appeal, reduces costs and

rewards me. So, the drivers do vary by industry.

We’ve looked at demographics in the wireless market

in the U.S., studying the entire mobile experience. It turns

out that for Baby Boomers, one of the most important ele-

ments of value is the connection provided by the wireless

network. But if you look at Millennials, they are much more

interested in some of the emotional elements of value,

such as belonging and entertainment. We are seeing pretty

dramatic differences by generation and by industry — and

I’m sure it’s even further segmented. As we get larger sam-

ple sizes, we’ll be able to look at this in more detail.

How are companies using the 30 elements in practice?

As indicated, smartphone providers are doing really well —

not just Apple. There is something about those devices and

the value they offer. Another company that is delivering

great value is USAA. We found that their insurance business

delivers on 13 of the elements of value. They are known to be

a leader in customer satisfaction, but what is interesting is

The 30 Elements of Value

Social Impact

Life Changing

Emotional

Functional

Self-transcendence

Provides

hope

Reduces

anxiety

Wellness

Saves

time

Reduces

effort

Avoids

hassles

Reduces

cost

Quality Variety Sensory

appeal

Informs

Simplifies Makes

money

Reduces

risk

Organizes Integrates Connects

Therapeutic

value

Fun/

entertainment

Provides

access

Attractiveness

Rewards

me

Nostalgia Design/

aesthetics

Badge

value

Motivation Heirloom Affiliation &

belonging

Self-

actualization

i

FIGURE ONE