Definition of customer value in the context of a value chain

This is a complex question with multiple interwoven threads of inquiry. To do any of them justice in a simple post is impossible. Perhaps I could just throw out some points for consideration?

The customer is the person who pays the bill. In an online news site -- as in paper news sites -- the customer is not the reader, because the reader does not pay the bills. The advertiser does. The advertiser is the customer. The product is not news. The product is the reader. The news site uses inflamed retelling of daily happenings to aggregates a demographic profile of readers/watchers/gawkers that an advertiser is willing to pay for.

This is value triangulation and is seen in many industries. Let's go to the extreme -- so that we can tie back to the point about the calculation of customer value as the foundation for decisions about cost savings measures.

The extreme is in the non-profit sector. Who is the customer of the local youth service agency? It is not the youth -- they don't pay for the service. It is the philanthropic donor that pays the bills. In the best case scenario the demographic profile of the youth combined with the "great' work the nonprofit does is the product which is sold to the donor. Sophisticated donor acquisition (fundraising) departments understand the psycho-graphic profile of the prospective donor to know that often the donor really cares very little about the actual work-- what they are purchasing is pride, legacy, name, profile and often even guilt-alleviation. They design their product offering accordingly. The result is that we have fancy balls that masquerade as charity events to benefit this or that perceived or real victim of such and such injustice. If one believed that the youth were the customer, then clearly these balls would be cancelled. Unfortunately if they were -- or the dinner, or the fancy team or the . . . . - the funding would dry up.

The word that emerges out of the nonprofit sector in their attempt to deal with this triangulation is "Stakeholders" -- there are multiple stakeholders -- of which the "customer" or the person paying the bill has one.

For a complex multi-national company such as yours there is a complex network of internal and external customers -- and stakeholders. The investors are stakeholders. The vendors are stakeholders. The employees are stakeholders. Together those complex weave of relationships forms your company's community.

And for a community to survive -- there must be some level of value to all of the members of the community to stay engaged. End of the year bonuses and birthday parties may not deliver any value to the customer -- but they keep employee moral high, productivity high, turnover low, all of which can demonstrably impact the bottom-line for the investors. A strong brand protects margin on premium products and decreases cost of new product introductions. A healthy vendor network allows

I would propose that a "logic model" can be developed which ties evaluative assumptions together to connect an expense to the core value delivered to a stakeholder. The stronger those logic models, and the tighter the chains they construct the better. The key is to understand the true customer and to honor the value of all stakeholders of the "community."

I don't know if this provides any illumination or simply more confusion -- but I did appreciate the opportunity to articulate!