Defined simply as the worth of a product or service in the eyes of a consumer, customer value is the core of long-term relationships between consumers and organizations and quality customer experience. It is essentially the balance between the benefits obtained from a product or service and the effort and energy spent on obtaining it.
Value differs from customer to customer due to the various factors that affect their purchase decisions. Some of these include:
- Quality of a product
- Ownership benefits
- Company brand and affinity
- Accessibility to a solution
- Success in achieving objectives upon using the product or service
- Long-term takeout (including knowledge)
Importance of customer value
The paradigm of value that a customer obtains from a product or service will vary over time. They may start out with a concept of what you provide, but that will eventually evolve as they interact with other people and your brand.
As a first step, you need to understand what your customers want, their buyer persona. So, if you are a café owner, the experience you give to your customers will determine the value for them more than the cost of the product. Do you provide a seating arrangement where they can enjoy a cup of coffee, or you only provide take-outs? If it is the former, is the ambience relaxing so that they can come and unwind?
It is important that you develop a strategy that not just addresses customer expectations but also helps your customers understand what you are bringing. By this standard, the value you offer should compel them to buy your product.
How can you increase customer value?
Most customers already know what they’re looking for. They’re also aware of their own issues and can even resolve them through effective remedies. Having a good understanding of what makes them happy is very important to improve the customer experience. Conducting a survey or talking to customers can help identify what makes them happy.
Make improvements to your value proposition
Consider all the companies that provide exactly what you do. When faced with similar products, customers are more likely to make a subjective decision. They are also more likely to be won over if you can show how your product or service is differentiated. This can be accomplished by:
- Recognizing and capitalizing on your strengths
- Making your value proposition transparent in all your conversations
- Enquiring why clients buy from you and using the information to improve your value proposition
- Using genuine data to quantify your worth
- Ensuring your customers clearly understand the advantages of your offering
Create audience segments
Your customers have different opinions about what they value and how they need to be satisfied. Understanding what makes them tick will help you develop a value proposition that fits to their needs. You can also segment your audience by their demographics, season, and product features. For instance, if an adult values something, it may differ from what a teenager values. To develop a value proposition that fits to their needs, you have to first determine what kind of gesture they would appreciate.
Eliminate price competition
Competing on price alone may result in loss of customers. Most people will spend more if they believe they are getting a better deal. Having satisfied clients who see value in what you offer is also beneficial for you as it allows you to maintain a steady flow of new customers.
Even if you offer the lowest price, a dissatisfied consumer will still go somewhere else. Set a price that shows that you are giving value while also maximizing your profit margin. People who are comparing prices will typically perceive value if the product is somewhere in the middle.
Concentrate on your VIP customers
If you distribute your resources across all of your customer bases, you won’t be able to get a good return. So, it’s important that you focus on the clients who are delivering the most value. Another important factor that businesses need to consider is segmentation. This can be done through the establishment of dedicated service teams and sales force.
Being able to retain a client is less expensive than acquiring a new one. Having excellent service is also beneficial for businesses as it increases their customer value and makes them more valuable in the long run.
Ways to enhance customer value
Conclusion
To effectively market your products and services, you need to thoroughly understand the various facets of your market. This step will allow you to identify the key audiences. Once you have identified the key audiences and their needs, you can then develop a sound value proposition.
For more on consumer insights, please connect with Suyog Keluskar @ suyogk@avalonglobalresearch.com.