Customer Value

Imagine you're in a store and you find a product that you absolutely love. You can't wait to take it home and use it, but then you realize it costs more than you're willing to spend. Disappointed, you put it back on the shelf and leave the store empty-handed. What went wrong? The store failed to provide enough customer value to justify the price.

Customer value is a key concept that businesses must understand to succeed. It's not just about offering a great product or service; it's about providing something the customer perceives as valuable enough to justify the cost. In this article, we'll explore the different aspects of customer value, from its definition to its management and everything in between. We'll dive into the customer value proposition and explore how companies can use it to differentiate themselves from their competitors. We'll also take a look at the customer value journey, which maps out the different stages of the customer's experience with a company.

Whether you're a student looking to understand the basics of customer value or an entrepreneur trying to improve your business, this article has something for everyone!

Customer Value Definition

Customer value is the worth a product or service has for a customer. It's the benefit they receive in exchange for what they pay, including both functional and emotional aspects. The higher the perceived customer value, the more likely they are to purchase and remain loyal to the product or service. Thus, the customer value definition is as follows:

The value attached to products and services may refer to several different things, including the benefits these goods or services deliver to the company's target market and the value for money they provide consumers.

Companies constantly try to understand and improve the value they add for their clients, allowing them to bring in new customers and keep the ones they already have satisfied.

In particular, finding out why clients are drawn to a brand enables much more efficient targeting and appealing to specific demographics.

It may also help develop trust between businesses and their consumers, leading to repeat purchases.

In addition, by understanding the factors that influence value, companies can begin actively shaping perceptions and ensuring that they constantly fulfill the expectations of their customers.

Customer Value Proposition

The customer value proposition clearly states what makes a company different from others - what they bring to the table for customers.

The following are elements of a customer value proposition:

• Quantified value: A customer value proposition should contain a list of the advantages a product provides consumers. This includes the numerous ways a product adds value for consumers beyond the practical value of the product - the emotional, economic, and symbolic value.

• Differentiation: The customer value proposition should explain to clients how a product differs from others in a particular category to demonstrate why it is the superior option.

• Relevance: A customer value proposition should clearly explain how a product help solves problems and responds to potential customers' needs.

Customers create expectations about the value and satisfaction of different market offers and acquire products and services based on these expectations.

Customers pleased with their experiences are more likely to make repeat purchases and share positive feedback. Customers unhappy with a product are more likely to speak poorly about it to others and switch to a competitor.

Value propositions like these are what set one brand apart from another. They answer the buyer's query: "Why should I purchase your brand rather than one of your competitors?".

Customer Value Journey

A customer value journey is the process a customer goes through when interacting with a company, from the first point of contact to post-purchase follow-up. It involves creating a positive experience for the customer at each stage of the journey, from awareness to consideration to decision to retention, with the goal of building a long-term relationship and maximizing the customer's lifetime value.

It is based on the dynamics of human connections and consists of various phases absent from a conventional marketing funnel. Not only does this result in a more natural sequence of encounters, but it also helps align the interests of the organization and the consumer around a shared success.

This results in satisfied customers who are more likely to be company advocates. The customer value journey is one of the most critical phases in developing an effective marketing strategy.

Some essential steps in the process of building a compelling customer value journey include:

1. Awareness refers to the channels a brand uses to make potential customers aware of the brand and its products.

2. Engage: Engaging is the phase in which the brand tries to receive the prospect's attention and trust.

3. Convert: Converting potential customers to actual customers through offering them various unique experiences.

Customer Value Management

Customer value management refers to managing all aspects of a customer's value journey, from the initial contact with customers to post-sales activities.

Customer value management can build a customer value-driven marketing strategy if they comprehensively understand customers and the market.

First, the firm must determine who its customers will be. It accomplishes this goal via the process of market segmentation.

Finding as many clients as possible and generating demand is part of marketing management. However, customer value managers know that they cannot satisfy all of their clients' needs. In fact, they may not provide satisfactory service to their existing customers if they use their efforts to accommodate everyone. Therefore, the business needs to prioritize acquiring clients it can successfully and economically attend to.

At the end of the day, customer value managers must identify which consumers they want to target, when, and at what volumes.

Additionally, the firm must determine how it will serve its targeted clients and how it will separate itself from its competitors and position itself in the market.

A brand's value proposition refers to the collection of advantages or qualities that the brand declares it will provide to customers to fulfill customer wants and needs.

Types of Customer Value

There are different ways to categorize customer value, but one common framework identifies four types of customer value: functional, monetary social, and psychological value.

Functional value

This type of value is derived from the product's ability to perform its intended function effectively and efficiently. For example, a laptop's functional value is based on how well it performs tasks like word processing, web browsing, and running software applications. Customers look for products that offer high functional value.

Monetary value

This type of value is related to the price that a customer pays for a product or service in relation to its perceived worth. It involves a trade-off between the monetary cost and the benefits or value the customer expects from the product or service. Customers seek monetary value to maximize the value they get from their spending.

Social value

Social value is created when a product is associated with a specific social group or status. For example, luxury cars are often associated with wealth and status, and owning one can provide the owner a sense of social value. Social value can be created by the product's design, branding, or marketing, and it can be an important factor in the purchase decision for many consumers.

Psychological value

This type of value relates to the emotional or psychological benefits a product or service provides to the customer. It includes factors such as the product's aesthetics, sensory appeal, self-expression, and the emotional response that it elicits. Customers seek psychological value to satisfy their emotional and self-expressive needs.

By understanding the different types of customer value, companies can design and market their products and services to better meet the needs and desires of their customers, and create a more compelling value proposition that drives customer loyalty and satisfaction.