Value, from the perspective of the customer, is often defined as a question in the context of Lean:
If the customer were here, what steps would they consider value add?
The converse of that question, it follows, would uncover what we consider to be waste. I agree with that approach, in general. The problem with that definition of value isn’t so much how it’s defined, but how carelessly it has been used in business. What I mean is that the question is often asked carelessly, leading to “projects” and activities that are haphazard at best and missing the mark completely at worse. That question – the question of value – should always be within the context of the larger organizational goals.
Otherwise, the improvement will be point-improvements, not aligned to the larger “true north” of the company. And that takes us to the next edition of Pareto in the Wild, brought to us by Forrester Research. In a recent study, they conducted a study on Shopping Cart Abandonment and what factors lead to customers leaving their online shopping carts while at the Checkout step. Below are the results:
As you can see, the data above forms a nice Pareto Chart, showing that Shipping and Handling Costs as “Too High” as the largest reason for customers abandoning their shopping cart at the point of Checkout. From the perspective of Lean Thinking, the Pareto shows the symptoms of why customers are abandoning their cart – the bars in the Pareto point us in the right direction. The next step is Root Cause Analysis, possibly asking the following with the goal of Reducing Shopping Cart Abandonment:
- What is “Too High” for Shipping Costs?
- Why does the customer not know the Shipping and Handling Costs prior to arriving at the Checkout Step?
After a quick 5 Whys on the questions above, the root cause should point logically and nicely to practical and very surgical countermeasures that we hope will reduce shopping cart abandonment. Then we implement, watch and measure, then we Adjust. Thus following the PDCA Cycle.
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From this customer’s point of view, it’s often the second in your list of questions that causes me to abandon an online purchase. I decide what I want, get to checkout then find I have more shipping, handling costs and fees than I’m willing to pay. And at that point the online retailer, generally an online florist, has hacked me off to the point where they are no longer in contention for my business the next time. I wonder if any online vendor has ever tried to do business with themselves? If they have, they have not learned from the experience. I want to know what a thing costs up front, anything else is a waste of something I value far more than money, time.