Businesses can deliver customer value in several ways, ranging from tangible aspects like product attributes to intangible factors like branding and service. For example, a company might deliver customer value through exceptional product quality, innovative design features, or competitive pricing. They can also deliver customer value through superior after-sales service, building trust and loyalty with their customers.
Each customer will have different considerations regarding these aspects. Some like the brand and the value it represents. Others might prioritize quality and durability. Others might be more price-sensitive and focus on getting the most affordable option.
What is customer value?
By definition, customer value is the difference between the perceived benefits and costs incurred by the customer. Therefore, the higher the difference between the two, the higher the value given by a product.
Businesses cannot control customer perceived value because it often involves customer perception. Only customers know how much a product is worth to them. Companies can only strive to provide a unique selling proposition, which the marketing team uses to influence how consumers perceive the company’s products.
How high the perceived value is, only the consumer knows. If customers believe a product can satisfy their wants and needs, it’s worth it. Therefore, they view the product as providing better value than other available alternatives. As a result, they will react positively to the marketing message. Then, they also respond by repurchasing it later or recommending it to their friends or family.
Customer value is dynamic
Customer value is dynamic; it can change from time to time and even during the use of the product. For example, a customer may find a product not performing as advertised. This represents a psychic cost and irritates them.
Finally, customers are reluctant to repurchase the product in the future. In fact, they may be reluctant to deal with the same company and not buy other products. Or they give negative reviews on social media.
Values can also change due to market dynamics, such as competition. Rational consumers will compare the benefits and costs of products available in the market before deciding to buy. Benefits and costs may change as the company’s competitive strategy in the market changes.
Take price as a simple example. Say your company caters to price-conscious consumers. For example, your company offers lower prices than your competitors. As a result, customers will see your company as offering better value than your competitors.
But at some point, your competitors may innovate or adopt an aggressive competitive strategy, making their product cheaper than yours. Finally, the value proposition you provide is no longer valuable compared to your competitors.
How to deliver customer value?
There are several ways to deliver customer value. And, broadly speaking, increasing value requires companies to increase perceived benefits or lower costs to consumers. Of course, the ideal is to combine the two.
Price
Prices represent monetary costs. When buying, customers have to spend dollars to get the product. Thus, offering products at lower prices is one way to deliver customer value. They have to spend less money to acquire the benefits the product offers.
Such a strategy is usually appropriate when the market is saturated with standard products. The various players offer similar benefits. Thus, price becomes a key differentiator in creating value and attracting customer purchases.
However, offering lower prices is not always a guaranteed path to success. Some consumers associate price with value in unconventional ways. Take the case of luxury goods. Some customers perceive price not as a cost but as a benefit. So, when the price goes up, they are increasingly interested in it because it gives them a higher image and prestige. In economics, we call these Veblen goods (not Giffen goods).
Product value
Customers buy for reasons such as features, durability, reliability, model, and product design. They believe these elements will deliver customer value by satisfying their needs or wants. These product attributes act as tangible representations of the perceived benefits customers expect to receive.
For example, customers who like to take photos and capture everyday moments will buy a smartphone with a high-resolution camera feature. It delivers customer value to them by providing more benefits, such as sharper and clearer photos. This allows them to preserve memories in greater detail, a benefit that aligns with their desire to capture life’s moments.
Looking beyond just the technical specifications, consider a customer who values a phone’s durability. Their decision might be driven by an active lifestyle or a history of accidentally damaging previous phones. A durable phone delivers customer value in this scenario by offering peace of mind and potentially reducing the replacement costs associated with fragile devices.
Ultimately, the specific features and benefits that resonate with customers will vary depending on their individual needs, preferences, and circumstances. Businesses that excel at understanding their target audience and translating those insights into products that effectively deliver customer value are more likely to achieve long-term success in the marketplace.
Customer service
Providing service is another way to deliver customer value. For example, people might decide to buy a product because they get free shipping. This delivers customer value by reducing the overall cost of ownership for the customer. Or, the company might provide them with an installation service, making it easier for them to place the product in their homes. This delivers customer value by saving them time, effort, and potentially technical expertise required for installation.
Consistently superior customer service doesn’t just increase sales; it also encourages customer loyalty. Customers who experience exceptional service are more likely to repurchase the product and recommend it to friends and family, further strengthening the company’s customer base.
Personnel value
The way staff handles customers directly impacts their perception of a product or service’s value. Communication skills and expertise are crucial, as they influence how customers understand the benefits being offered. Speed, thoroughness, courtesy, and friendliness all contribute to a positive customer experience, which is a key aspect of delivering customer value.
Sales staff play a vital role in helping customers make informed decisions and experience the value a product or service can provide. Effective listening skills allow them to understand customer needs, while the ability to explain how products can address those needs ensures customers choose the right solution. By providing clear and relevant information, sales staff empower customers to make purchases that align with their specific requirements.
Image
It is related to how brand name and image affect customer perception. Consumers are often attracted to certain brands because they are considered innovative or quality. Buying a brand could also make them self-actualize. Finally, it creates confidence in consumers, for example, when wearing it in public places. So, buying it is the right decision.
For example, a company maintains its consistency in providing fresh food. It contributes to its strong relationship with consumers. For consumers, buying products from the company is the right choice. They will always get fresh food and are unlikely to be disappointed.
Time cost
It refers to the time invested by the customer throughout the buying journey. Costs also include time spent learning and using the product. Time is a valuable resource, and delivering customer value means minimizing the time investment required for customers to obtain the benefits of your product.
For example, consumers have to spend time choosing the right kitchen cabinets. They compare prices, quality, and specifications for several available alternatives. This time investment is a cost factor to consider when delivering customer value.
Then, having decided, they may have to go to the vendor’s shop. Finally, after bringing the product home, they should take some time to place it. The goal is to streamline this entire process to minimize the time and effort required from the customer. The longer the time involved, the higher the cost, and the less customer value is perceived. After all, customers could be using that time for more productive purposes.
Physical cost
It refers to the energy the customer spends to get the product. For example, they may have to take a trip to the store to buy. The farther the store is from where they live, the more energy they expend.
Hence, one way to provide value to customers is to improve product accessibility. It requires proper planning and selection of distribution channels. Ideally, the product should be available in a location close to the consumer.
Moving things from one location to another also consumes energy. Thus, weight may be a consideration when consumers choose a product.
Psychic costs
Psychic costs are related to feeling annoyed or happy during the process of buying and using the product. For example, taking long trips to the store or taking a long time to learn how to use it properly can cause stress to the customer. These factors go beyond just time and energy costs; they negatively impact the customer’s psychology, reducing the overall value proposition.
In other cases, customers buy because they see an ad promising a certain level of benefit. But after buying, the product doesn’t live up to the promotion, creating a feeling of disappointment and further diminishing perceived value.
Thus, one way to deliver customer value is to make the product easy to access, use, and perform as the company promises. This minimizes psychic costs and ensures a positive customer experience, ultimately contributing to higher customer satisfaction and loyalty.
