Customer Value Creation Ideas with Example

Published by: Shivendra Tiwari

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What is Customer Value?

Customer value is as an indicator of a product’s worthiness vis-a-vis other competitors in the market. Providing the correct consumer value requires an understanding of customer needs and wants. Customers will shift to competitors if they feel they aren’t getting the right value. Figuring out their needs can be a difficult task.

The value that the products provide is measurable against competing products. Suppose the customers think that the value provided by the product or service doesn’t match what they paid for it. Then what the customers spend is seen with regret. This is called buyer’s remorse.

How to Measure Customer Value?

Estimations of customer value are made with the help of cost-benefit calculations:

1. Identify benefits

The general benefits we seek are listed below

  1. Product quality
  2. Better customer service
  3. Business partnering social benefits
  4. A unique experience for customers
  5. Better brand image
  6. Improved Solutions

2. Total costs

Costs can be of two kinds: tangible and intangible. Distinguishing between the two helps separate the monetary costs expenses from other ones. This difference should be considered when estimating customer costs. Some forms of costs are listed below.

  1. Time costs spent in figuring out product functions
  2. Negative brand image costs
  3. Accessibility charges
  4. The stress of installation or purchase
  5. Renewal amount
  6. Maintenance charges
  7. Suboptimal customer satisfaction
  8. Installation charges

3. Find the difference between benefits and costs

Customer Value Formula:

Customer Value = Total Benefits – Total Costs

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The Importance of Customer Value

The Importance of Customer Value

1. Customers don’t seek out specific products

Potential customers will try and seek out answers to their queries and solutions to their problems. Customers perceive they have specific problems they are trying to address. They don’t necessarily look for particular products of a company. This is when companies should try and engage with customers to ensure they know what consumer demands are.

However, a drawn-out consultive process can upset customers. They are on the lookout for specific information and will steer the conversation in that direction. Taking this approach can help in coming up with solutions to customer needs or at least a perspective on how to get there.

2. Understanding Customer Needs to Resonate with them

Every single customer should be given importance. However, some existing customers stick around for a long time, returning to purchase. Yet others provide good publicity through customer advocacy by referring the business to the most valuable customers. Some customers bring more value than others.

A product or service can also be useful to every organization. However, its perceived value is indeed most significant in one particular section of the market. It is this section that will generate the highest sales revenue for the product.

A company that has figured this out can market the value the product offers to this specific section instead of only the benefits and features. This approach can be used to boost sales.

3. Customer Value changes from one person to the next

What customer value means changes incredibly from one customer to the next. What the word means varies for all. The value sought from the product, for example, can be more immediate in nature, or it might be a more long-term requirement.

Although the utility of the product or service is constant, this variation exists only by adding new customizable features to it. One way of looking at it is that customer value outweighs product value. The former changes from customer to customer and can be adjusted to suit their needs.

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How to improve Customer value within your organization?

1. Outline the Target Market

Figuring out the target demographic for a company’s products is central to measuring product value. The desires and needs vary from segment to segment. So the type of people to whom a company wants to sell its products should be identified.

2. Defining Customer Needs

The first step is to identify the target customers. Next, it is crucial to identify their needs and wants. This helps any business in creating customer value. This can be done via customer feedback.

3. Select Central Enhancements

All products and services should be able to give customers a few benefits, such as speed, good quality, reduced price, etc. It is essential to know how much these things matter to the customers. Once that is done, these aspects can be fine-tuned to suit their needs. If these aspects are looked after, then it can push the product ahead of competitors with similar products.

4. Demarcate market segments

A single value proposition for the whole customer base can be counterproductive. Customers interpret the perceived value in different ways. Therefore, it is crucial to find the needs and wants of each demographic and tailor messages according to their needs and wants.

Factors such as age, product qualities, demographics, location, month, etc., can all influence their customer value concept. For instance, the tangible benefits that a youngster sees in a product would probably be lost on a senior customer.

5. Reorganization Business Procedures

Overhauling core operations in a firm, if done excessively or insufficiently, can damage business. Problems integral to the firm can get amplified by these processes. This is because the inner functions of any business impact customer value and positioning in the market.

Companies should try and work on improving their processes, however. This can include product design, logistics, etc. This will increase the brand image before valuable customers and improve customer value.

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6. Enrichment of Staff through Training

Motivation and training can make quality employees become a force to reckon with. Employees are at the heart of any business. They carry out all the internal processes. They are also responsible for engaging with customers. So, it makes sense to spend resources on all the employees. That way, the company can maximize its performance. This displays the dedication and professionalism of people.

The company should also evaluate the improvements. A standard base should be set, factoring in the strengths and weaknesses of the employees. This way, the company can focus on steady growth.

7. Technology as an Asset

Technological improvements can affect many different areas. It can impact individual contributors and management actions equally. Innovations in tech allow companies to develop particular aspects of their operations. Companies should assess current capacity and processes and see where there is room for tech innovation. Improvements like automation can take the burden off the shoulders of the employees.

Customer Value Creation Ideas

Customer Value Creation Ideas

1. Ease of Purchase

There should be multiple purchase options (Omnichannel platform) available for the customer. This makes the process of buying a lot easier. Also, the delivery process can be made very convenient.

2. Create Value Proposition

Value propositions that stand out from the competition are great for increasing customer value. They should be used to convince clients why doing business with the firm is more beneficial.

3. Offer Add ons

Complimentary gifts and services make customers feel wanted. In addition, it gives them the impression that they are getting more value for the same cost.

4. Customer Service

There is a human connection between customers and employees. Being considerate and humane towards them ensures excellent customer service and also benefits the staff.

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5. Capitalize on User-Generated Content

User-generated content is produced by online by customers that speak about a brand or product at their own free will. This can be negative or positive. User-generated content is not paid for. Therefore, it is crucial to keep an eye on this to see what people are saying about a brand. If a company or brand can stay on top of its game, then the social media content generated by the users can be a boon to add value to products.

Customer Value Example – Tesla

Customer Value Example Tesla

Most automobile manufacturers rely on third-party distributors for selling their cars. This means customer relationships and service is out of their hands. Tesla, however, has the entire process in-house, right from manufacturing to sales.

The entirety of the messaging that customers receive is overseen by Tesla. Moreover, the firm prioritizes customer satisfaction. So the whole customer journey, test drives, maintenance, etc., are all managed by Tesla; thus elevating customer value.

Key Takeaways | Conclusion

Customer value is the perceived value that consumers attach to products they have purchased. This is compared to the cost of the product to decide whether the purchase was worth it. Customer Value can be measured to see how the product fairs vis-a-vis competitors. Efficient Customer service is integral to customer value. If the firm can bring professionalism in its service and internal processes, then customers are provided value.

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Shivendra Tiwari

Shivendra Tiwari is an Engineer by education, writer by Profession, and Online Marketing Enthusiast by Passion. He loves researching and writing meaningful articles on subjects of Marketing, Digital Marketing and Management