Find out what customer value is and how to improve it

Find out what customer value is and how to improve it

Today, more than ever, brands must create and communicate value in all the actions they take. Faced with increased competitiveness, consumers have more and more options to choose from, with high expectations and low loyalty if established criteria are not met. Therefore, to communicate value to our audience, we need to understand what value really is and, most importantly, what it is not. To do this, in this article we explain what is the customer value and how to improve it. Don’t miss it!

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What is the customer value?

We could define the Customer value such as the satisfaction that the customer experiences or expects to experience when performing a certain action relative to its cost. The action is usually a purchase, but it can also be a registration, vote or visit, for example. Cost, on the other hand, refers to everything the customer has to “lose” to receive the desired benefit. It can be money, data, time or knowledge.

The internal supply chain, which encompasses both operations and processes, sales, marketing and customer service, contributes to the creation of value. Also other departments such as human resources or accounting. All the components of a business directly or indirectly affect in a way, creating a perception among the consumer.

The results of a company’s effort to create value are measured in the perception that customers have of that value. In summary, customers compare their perceived value with that of other similar products when making a decision.

In other words, customer value measures the value of a product or service and compares it with the rest of the possible alternatives. This metric determines whether the customer feels they have received enough value for the price they paid.

The value of the customer can be seen as an idea of ​​buyer’s repentance. If customers feel that the price of an item exceeds its benefits, they will regret their purchase. Especially if a competitor makes a better offer for a similar product or service. Understanding customer value and how to calculate it helps companies evaluate products fairly and reduce friction within the Client experience.

Why is customer value important?

Value is created by developing and improving processes, among other things. It is also a subset of a company’s culture and vision. In fact, while the culture and mindset can be difficult to change, it is entirely possible to transform these concepts to put much more emphasis on creating customer value and improving the business. its customer experience.

On the other hand, it’s important to keep in mind that value, or perceived value, can change throughout the customer journey. When a product or brand is first presented to them, they have or create an idea about it, and this will change once they start interacting with the business.

There are many reasons to create customer value. Next, we highlight the most notable:

Loyalty of the clientele

The consumer loyalty it is the result of excellence and attention to detail. Both are fundamental to a business and should be the primary goals of any organization in its day-to-day operations, regardless of industry. Oddly enough, even small improvements in customer retention can have a huge impact on a company’s bottom line.

Brand prescribers

Satisfying customers to the point of recommending one company over another comes naturally to them. For an organization, this can lead to changes in its market position. Consumers become advocates or advocates of the brand by doing the work of the marketing team for free. Public enthusiasm for the business will help attract new potential customers, which will contribute to the long-term growth of the company.

How to measure customer value

For many organizations, the Customer value it’s about money. However, it is essential to keep in mind that customers place more importance on the business than the price of the label itself. There are costs in time, energy, emotions, etc. Everything that customers weigh when making the buying decision.

Various formulas can be used to measure customer value. The easiest is the following:

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Perceived value = Perceived benefits / Cost

In other words, for a set of benefits, as the cost increases, the perceived value decreases.

On the other hand, there are also different types of benefits that influence customer decisions. Some are tangible, like the product, or intangible: will wearing this product change my social status in the eyes of others?

Here are the benefits you should consider:

  • The reputation of the brand
  • The quality of the product you are selling
  • The social benefits of partnership with the brand
  • User experience
  • The quality and predisposition of the team attention to the customer
  • The ability to react quickly to incidents

Now that we know the benefits, let’s analyze the costs to the customer, both tangible and intangible. Let’s start with the tangibles:

  • The price of the product
  • The cost of access to the product
  • Installation or incorporation costs
  • Renovation costs
  • Maintenance costs

Now let’s take a look at the intangibles:

  • Physical or emotional stress induced by the purchase or installation of your product
  • Time invested in purchasing the product
  • Time spent understanding how your product or service works.
  • Non-existent brand awareness
  • Bad user experience
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