What is Customer Value? Know the Determining Factors, How to Measure, and Develop It
Customer value is one of the important values in determining the success of a business and its products. To measure or improve it, there must be a special and specific strategy.
Customer value in your products and services will affect consumer loyalty to the brand.
Therefore, learn more about customer value, starting from the meaning, determining factors, how to measure, to developing it in the following article.
Understanding Customer Value
Customer value is the consumer's perception or view of the value (can be in the form of usefulness, price, to impact) of your product or service. Quoting Indeed, this perception can be in the form of satisfaction, happiness, or even consumer dissatisfaction after using your product or service.
Simply put, customer value is how often consumers repeat orders or continue to buy your product after being purchased or used for the first time. In addition to products and services, customer service is also usually a factor that is assessed or influences consumer perception.
That way, consumer feedback and praise are also included in the factors for measuring good customer value. You can use customer value to determine the type of product or service that can achieve success in the market and increase consumer satisfaction.
Customer value is subjective
Businesses often feel that customer value can be changed simply by promotions or discounts. However, the value created by consumers about your product will be subjective.
This means that, as explained, customer value is a form of consumer satisfaction based on their experience using your product.
Therefore, customer value is not only about money or the price of a product. Customer value is formed from the benefits and solutions that businesses offer to make consumers' lives easier through a product or service.
Factors That Influence Customer Value
Some factors that can influence customer value are:
- Benefits of products and services
- Functions of products and services
- Prices of products and services
- Consumer service after purchasing products and services
- Product and service warranties
- Quality of products and services
- Branding of products and services
- Image of products and services
- Income level of target consumers
- Target consumer preferences
- Consumer experience after using similar products and services
Why is Customer Value Important?
Good service from a business will influence customer value and of course ensure the sustainability of the business.
Citing the results of the Consumer Trends Report from Zendesk, here are the reasons why customer value is important:
- 93% of consumers will be more confident in buying/using your product if they are given customer service.
- 90% of consumers will be more confident in buying/using your product if there is personal service.
- 64% of business owners say that customer service has a positive impact on business development.
- 60% of business owners admit that customer value can increase customer retention.
- 47% of business owners report increased cross-sell thanks to customer service.
How to Measure Customer Value
In general, there are three main ways to measure customer value, here is the explanation:
Measuring the benefits that consumers receive
Some of the values measured are:
- Quality of products and services
- Image of products and services, and the value/image of the company in the public.
- Better offers than competitors.
- Customer experience while purchasing a product.
- Quality of customer service.
- The value that the product or service provides after consumers buy and use it.
To measure it, you can conduct an offline survey by inviting loyal consumers to an event or online via social media or email marketing.
Calculating the costs required
There are two types of costs, those that can be calculated or seen in the form of numbers and those that cannot be calculated (for example, consumer feelings).
Examples of costs that can be calculated include:
- Production costs
- Installation costs
- Maintenance costs
- Repair and renewal costs
- Additional costs (admin and platform fees)
Examples of costs that cannot be calculated include:
- The duration required for consumers to make a purchasing decision.
- Emotional value when consumers are faced with a brand and make a purchase.
- Social value when consumers choose your brand over competitors.
- The duration of time needed to learn to use the product and feel its benefits.
These costs can be factors that affect the operational data for manufacturing, selling, and distributing your product.
Use the customer value formula
Simply put, the formula used is:
Consumer Benefits - Consumer Costs = Customer Value
With this formula, it can be concluded that the higher the benefits obtained by consumers and with the same costs or prices, the higher the customer value will be.
How to Develop Customer Value
Summarizing Qualtrics, here are nine ways to develop customer value:
- Create personal interactions and support between businesses and consumers.
- Provide support or customer service options in various channels.
- Prepare programs that make it easy for consumers to master the use of the product.
- Prioritize customer success in using the product.
- Always pay attention to existing patterns when serving consumer complaints.
- Make sure consumers feel heard and understood.
- Find opportunities to surprise consumers and add product benefits.
- Always appreciate and give gifts to loyal consumers.
- Create a special community of users of your products and services.
It can be concluded that customer value is a value formed from feelings of satisfaction and happiness after consumers use a product. This satisfaction can be increased by increasing the quality of products and services to consumers.
Customer value is also beneficial for businesses to prioritize high-quality services and become a solution-oriented business for consumers. That way, sales will increase by themselves.
If you want to learn how to increase customer value and consumer satisfaction as a whole, join the Prasmul-Eli Customer Satisfaction Relationship short program.
Professionals and industry experts are ready to share their experiences and best practices with you. Interested? Click here to register for the program!
