The Paradox of Value Experience and Value Creation: Both a Pitfall and Opportunity for Organisations

It is crucially important for organisations to understand their customers in order to form strong value propositions. These value propositions can be seen as ‘offerings’. Customers are able to create value (known as value-in-use) through using these offerings in their own context. This causes organisations to think about customers’ value experience in the value creation process through the whole customer journey. This article introduces a critically important paradox for companies to properly comprehend. We offer practical implications for organisations that should be integrated into existing business practices to overcome a dangerous pitfall.

“The current article is presented by the authors Yasin Sahhar and dr. Raymond Loohuis in June 2017 at the Naples Forum on Service in Italy.”

Why even bother?
Both value experience and value creation are at the core of an organisation’s marketing strategy. Therefore, it is crucial to understand these concepts and their underlying processes. Understanding how customers experience products or services, creates a clear and in-depth view of the entire customer journey. As such, value experience and value creation form the source for the development of strong and innovative value propositions. This gives organisations the opportunity to create greater competitive advantage.

Two core concepts in marketing
As recently stated by scholars, value experience is a subjective phenomenon in which value is directly or indirectly experienced by subjects in their lifeworld context.

“Value resides in the experience of consumption, meaning that value can be experienced during the creation of it.”

Value experience has a couple of characteristics: it is an interpretation of value creation activity by each individual, it depends on the context this individual is in, and finally, it is phenomenologically determined. This means that the ‘lived experience’ of customers is subjectively determined. In other words, one’s experience is discovered and detected by the subject itself. Value creation, on the other hand, is conceptualised as the customer’s process of extracting value from resources.

We distinguish value experience between reflective and unreflective value experience. Where reflective value experience refers to customers consciously experiencing products or service, unreflective value experience means that they are not conscious about the product or service as such. As recently pointed out, the latter mode of value experience, is often underestimated or unknown by practitioners. When organisations aim to investigate customer needs, they approach this from a rationalistic account, meaning they frequently focus on what is known by the customer. In other words, ‘what goes on in the mind of the customer’. However, this information does not fully represent the whole customer experience because it does not tap into the unconsciously experienced value of customers.

Breakdowns: how the unknown becomes known
The main goal of organisations is to provide customers in such way to optimally accommodate the customer’s value creation process. In cases where everything occurs without problems, customers are in the ‘flow’ meaning they are able to create value through using the product or service. In these instances, customers unreflectively experience products or services. Until now, we still did not know how unreflective value experience then becomes reflective. Research concludes that, so called ‘breakdowns’, mediate unreflective and reflective value experience. Breakdowns can be conceptualised as interruptions of the customer’s value creation process. There exist ‘minor breakdowns’ that represent a temporary breakdown in the customer’s value creation process. In such instances, customers are briefly interrupted from their ‘flow’ (i.e. their value creation process). A more severe form is called ‘major breakdowns’ that portrays cases where customers are permanently blocked from their ‘flow’. Recent research shows that such breakdowns cause unreflective value experience become reflective. So, despite its negative overtone, breakdowns can be of crucial importance in bringing crucial information on customer needs to light. Then the question arises, how does this relate to value creation? We will uncover this in the upcoming section.

Three linkages between value experience and value creation
Research shows there are three different linkages between value experience and value creation. First, unreflective value experience goes hand in hand with full value creation. In this case, customers are not aware of the product or service as such but are merely concerned with the value creation process. They solely focus on the value creation activities that help them reach their end goal in mind. In this case, value experience is fully embedded in the value creation process and therefore remains covered. Second, reflective experience and value creation can jointly occur. In such instances, a minor breakdown causes customers to become reflective. They are temporarily interrupted from their flow and therefore become reflective about certain features of the product or service. In this situation, customers are still able to create minor value while being reflective. Moreover, adjustment and learning take place. This means that customers are able to adapt themselves to the circumstances (in cases of a slightly stronger form of a minor breakdown), and can learn from the situation (in cases of a slightly milder form of a minor breakdown). Third and finally, reflective experience excludes value creation. In these incidents, customers are fully reflective of the product or service only and are not able to create value anymore. They are permanently blocked from their flow and no value creation takes place.

Illustrative framework of three different modes
The linkages between value experience and value creation that are discussed below, are depicted in the following figure. The figure illustrates that value experience relates to the customer’s flow of the value creation process and modes of value creation. We show that the higher the unreflective experience of products or services, the higher the continuity in the flow of the customer’s value creation, and therefore the more value is created. On the other hand, the more customers are reflective about their experience of products or services, the less continuous the flow of the value creation process and as such less value is created. The middle form shows that reflective experience can occur while the flow is temporarily interrupted and still value creation takes place. This form shows that customers learn from this interruption or even adapt themselves to it.

A gardener who is mowing his lawn
These different linkages will be illustrated with the following example. Take a regular gardener, who aims to mow the lawn in his garden. The gardener makes use of several equipments, including a lawn mower, to make his garden tidy again. When using the lawn mower and it does its job correctly, the gardener is not concerned with the brand or company that provided him with the lawn mower. He is just concerned with realising his end goal in mind, namely mowing the grass and tidying his garden. In this case, the gardener unconsciously experiences the lawn mower and thus his value experience remains unreflective. This changes in cases of errors. When for example the lawn mower gets blocked because a branch got stuck between the propelling knives, the gardener becomes aware of the lawn mower. In such instances, the value experience becomes reflective because an interruption of the usage process takes place. Still, the gardener is able to create minor value. He is able to adjust himself or learn from the situation. Next time, the gardener will likely avoid areas where branches are present or will first clean such areas before mowing the grass. The process of value creation gets permanently blocked in cases of more severe interruptions. Take for example when one of the cutting knives gets broken. In such instances, the gardener becomes fully aware of the product, the lawn mower, he is using. He thus reflectively experiences the lawn mower. As such, it is highly likely that he will reflect upon for example the quality of the lawn mower the company offered him. In these cases, the gardener is not able to create value anymore.

Illustrating the paradox between value experience and value creation
Companies nowadays only focus on improving their offering for customers. They are mainly concerned with enhancing customers’ experiences. Ironically, there is a great danger for companies in doing so. When everything goes right, customers are indeed able to create value when using a company’s offering. However, ironically speaking, customers do not experience products or services as such when everything goes right. As such, customers are not aware of the product or service offered by the company. As a result, customers even may take things for granted. In this, the danger is present that customers do not appreciate the offering provided by the company. Of course, the company’s goal is to provide customers in such a way they can create value. Nevertheless, the product or service at hand is unconsciously and thus not reflectively used. In this way, the customer’s value experience remains unreflective and the product or service is taken for granted and loses the strength of its presence. This poses a major pitfall for organisations.

Overcoming the pitfall
For organisations to be aware of and overcome this pitfall, a couple of implications can be made. First, it is of crucial importance for organisations to understand the linkages between value experience and value creation. This means organisations should focus to understand the customer experience through the whole customer journey. When organisations are aware of the three linkages previously identified, they are better able to understand how customers experience products or services and create value. Second, in order to breach the taken for granted things by customers, organisations could introduce so-called ‘artificial breakdowns’. These artificial breakdowns are minor interruptions of the value creation process in order to turn the customer’s unreflective value experience into a reflective one. These minor interruptions may give organisations the chance to get in touch with their customers (and thus offers a moment of value co-creation). As such, it may provide organisations with useful information about the customer’s experience when asking them what went wrong or what their needs are. Moreover, when integrating artificial breakdowns into the customer’s lifeworld, customers become aware of the brand and/or product. Even though this is for future research to be investigated, it can be helpful to let customers appreciate a certain product, service or brand on the condition that the interruptions are not too severe.

This article is based on: Sahhar, Y. & Loohuis, R.P.A. How is the Customer Contributor and Interpreter of Value? Opening the Black Box of the Linkages between Value Experience and Value Creation. Conference paper: Naples Forum on Service, Italy, 6-9 June 2017

This article is the third in the series of the Value Proposition Research Program. For further information on the Value Proposition Research Program, please visit our website.

Inschrijven voor de nieuwsbrief van The Next Organization.

Met de nieuwsbrief van The Next Organization blijft u op de hoogte van activiteiten binnen The Next Organization, actuele ontwikkelingen binnen ons vak en interessante en relevante artikelen. Deze zult u ongeveer eens in het kwartaal ontvangen.


Inschrijven gelukt!