Building value-added partnerships through Co-Creation
Customer loyalty is high on the corporate agenda: Loyal customers buy bigger quantities, they buy more frequently and they recommend a company to others. This leads to recurring business and boosts financial success.
Often, customer retention is unilaterally initiated by suppliers and it seems that they profit more from the relationship than their customers. However, a well functioning, long-term relationship is based on the same rules as a good partnership in private life: There must be trust and the relationship has to be considered fair. In a business context, fairness means that the resulting added value for both parties is financially quantified and equitably shared.
Customers should not feel ´locked-in´ by a relationship, with only a small chance to escape, because they technologically or contractually depend on a supplier. Rather, both parties should aim to build a long-term partnership where they jointly create value.
Digitalization offers suppliers and customers entirely new possibilities to develop one-sided relationships into real value-added partnerships through co-creation. The objective is to boost both parties´ business success. Thus, e.g., machinery or medical technology manufacturers can leverage data-driven ´smart services´ to reduce their customers´ maintenance cost and machine uptime. By applying value-based pricing considering the added customer value generated instead of exclusively taking internal costs as a calculation base, suppliers can ´capture´ a fair share of the added value jointly created.
However, data-driven Co-Creation only works if customers are prepared to supply status data of their machines and if suppliers can guarantee strict confidentiality and data security. The foundation of such a kind of relationship is trust as well as a transparent and fair contractal agreement.
Many suppliers are fully aware of their customers´ reservations concerning the provision of data. So, they offer local solutions as a first step. Here, the data remain on the customer´s premises and they are analyzed there. Once this type of collaboration has proofed successful, it can be taken to the next level, where customers provide their data in a cloud. On that basis, suppliers can develop innovative, data-driven services which help customers improve their business.
Working together in this way, suppliers and customers can jointly create added value and both profit from a close, long-term partnership.