In this day and age, competition is intense, and there’s more than one business supplying a particular kind of product. A business must heavily rely on several factors, such as product quality, pricing, and accessibility; however, a critical factor that many businesses end up neglecting is building customer loyalty by working on and improving customer value. Companies focusing on customer experience can thrive 4-8% above the market.
What is customer value?
Let’s talk about value first. A value of a product is the importance or the worth of a product. For example, you measure the value of a house before buying it.
Customer value, however, is the level of satisfaction of the consumer upon buying a product when comparing the product to possible alternatives. This level of satisfaction is measured when a consumer weighs the benefits of the purchase against the cost.
customer value = benefits of purchasing a product – the cost
The following example can help explain customer value better. You, as a customer, buy a slice of pie with no topping for $2.5. You aren’t satisfied with it in terms of quantity and get something else the next time. As a result of the constant lack of sales, the seller reduces the price to $1.5 per slice.
You and other customers start to buy the slices of pie, and sales go up. The lower price is better suited to the size and quality of the product. Another step the seller could have done was increase the slice’s size and add a cherry on top, which would have added to the value of the purchase.
This example shows that the seller was able to determine the customer value of a product and altered the situation to their benefit. The phrase ‘customer value’ is an important term for a business to work on as it determines the product’s sales and how the customers receive the product or the service.
Is customer value measured only in monetary terms?
When purchasing a product, a consumer does not only focus on the price. A consumer considers other benefits as well. These benefits include, but are not limited to:
- The quality of the product.
- Reviews of other consumers’ experiences or their own past experiences.
- The brand of the desired product.
- The long term use of the product.
- Advantages of owning the specific product.
How to promote customer value?
It’s essential to keep in mind that customers buy things they need, like, or that the product provides a solution to their problem; not because a seller wants to sell their product. Instead of pushing a consumer towards a product, research in surveys and focus groups can be conducted, which can be used to find out why customers buy from that particular seller. This information can be used in future campaigns.
Since customer value is a concept that evolves during the use of a product, customer value should be measured at the time of the purchase as well as at a later stage. Therefore, finding out why a consumer chooses one product over the competition’s product can be useful information for marketing purposes.
The fundamental use of a product will remain the same for whoever uses it; however, its value will vary for different customers. One can view the product as an instant answer, and the other can view it as something which can be used over time for a long while.
Following are some helpful tips for sellers to consider to increase customer value.
- Benefits: Providing benefits other than the price of the product.
- Pricing: Decreasing the price of the product or introducing regular sales.
- Brand image: Improving the image of the brand by creating sustainable products.
- Accessibility: Making the process of purchasing a product simple for the consumer.
- User-friendliness: Improving the use of the product by making it user friendly.
- Advocacy: Recognizing and appreciating loyal customers, not only in terms of repeated purchases but also in referring others towards the product.
- Sense of priority: Creating a sense of importance for a consumer who believes the product will always be available and wants to delay the purchase.
- Staff training: Providing proper training to the salespeople as they’re the ones who convince the consumer to buy the product and the face of the product.
How to improve customer value for services?
Services are the parts of industries that can’t be touched, such as those provided by salons, the education sector, the banking sector, etc.
- Smiling at the customer.
- Giving appropriate attention.
- Solving the consumers’ complaints quickly.
- Confirming appointments and asking for feedback to improve the service; building a relationship with the customers.
- Compressing useful information in a short period as a consumer doesn’t like to spend hours on a discussion about a specific product.
Importance of customer value
Since the key to a successful business are the consumers, it’s essential to evaluate the importance of customer value of a product.
Advantageous position for the sellers
Perhaps the biggest advantage of customer value is the edge it gives the sellers over their competition. Providing benefits and exemplary service to consumers guarantees a better position in the competitive economy.
Understanding customer value helps with marketing campaigns, as there is a focus on the strategies implemented.
Evaluating and understanding customer value brings about customer loyalty, their recurrent purchasing of the product, and their outspoken advocating for others to invest too. The likelihood of customers purchasing from the same brand is five times more, and the possibility of them referring the brand to others is four times more.
Knowing the clientele
For a business to flourish, one of the first things a business has to do is determine who the clientele will be. Only by being aware of the clientele can a company move forward in making plans and implementing them.
The market is challenging and competitive. It takes more than just creating a new and useful product for a business to survive in the industry. There have to be more strategies involved, such as effective marketing, appropriate pricing, and customer value. Even if companies adopt some of the strategies listed above, they will progress in obtaining customer loyalty.