A profitable business can not only be achieved by creating the best products, but also through customer satisfaction. So, one way to ensure this is through the concept of customer value.
In this article, we will discuss everything you need to know about customer value. Starting from understanding, the factors that influence, to how to measure it.
Let’s just get started!
Understanding Customer Value
So, what is customer value ? In short, customer value is a term for the level of satisfaction felt by consumers after they buy a product or use the services you offer.
Customer value is usually related to the price of a product or service.
Several other aspects that can affect consumer satisfaction are brand, product quality, and long-term benefits of the product.
One thing that you must understand, customer value is subjective, meaning that one customer and another customer may have different levels of satisfaction.
Sometimes a consumer feels dissatisfied with the product or service you offer because they don’t really need it.
At the same time other consumers are very satisfied with the product for other reasons.
So, is customer value only in the consumer’s power? Certainly not. You really can’t satisfy all consumers, but you can still make consumers get this customer value satisfaction.
How to? The trick is to influence them to be willing and want the products / services offered.
To do this, you need to implement a marketing strategy. Before determining the right marketing strategy, you must also measure customer value.
If you have done both, then your chances are very big to satisfy consumers and multiply profits.
Factors Affecting Customer Value
There are several important factors that must be considered in order to get customer satisfaction / customer value. Here are a few factors to consider:
- Unique selling point
- Product / service / service function
- Product / service / service resources
- Branding & marketing
- Target consumer preferences (tendencies)
- The target consumer’s income level
- Experience of target consumers after using similar products / services.
From the list above, there are factors that come from the target consumers themselves, such as preferences, income levels and consumer experiences with similar products / services.
This means that the three customer value factors above are out of your control. So, you can conclude yourself, starting a business and succeeding in the midst of intense competition is not easy.
Usually, consumers are more likely to choose brands that they already know and use over new or unknown brands.
But don’t worry, even though your brand is not very well known, there are surefire strategies that can be applied to attract consumers.
The trick is to apply market segmentation, namely targeting consumers who have not been served by competitors.
Thanks to this market segmentation, you can create consumer value that they have never felt from a particular brand.
After the value is created, the next thing you have to do is measure the value, you can see how you can see it below.
How to Measure Customer Value
There are several formulas that you can apply to measure the customer value of a product, service and service.
The simplest formula is as below:
Customer Value = Benefits – Price
From the formula above, it can be concluded that the greater the benefits obtained by consumers (by buying products / services) at the same price, the greater the satisfaction (customer value).
So, you don’t need to apply a price war strategy with competitors with low profits, because they already have more value for potential customers.
This can be useful if you are selling the same product as an already-named brand.
If the product / service you offer is the same as the product / service offered by the brand, then all you can do is compete in terms of price.
The problem is, this will be difficult, especially if the brand is well known and has a good reputation in the eyes of consumers. So how do you compete with this brand?
The strategy you can do is to prioritize the unique selling point of your product / service. Thanks to this uniqueness, you can set prices to consumers more freely.
Apart from promoting unique selling points, here’s how to develop other customer values:
- Help target consumers understand the value of your product / service, one way is to have your own business website, digital marketing with social media and so on.
- Provide the best and maximum service to consumers, because quality service can provide satisfaction to consumers.
- Ask for input or feedback from consumers, whether it’s in the comments column on the website, social media, live chat and so on.
- Immediately create a new unique selling point before it is picked up by a competing company.
- Do branding, because with a strong-rooted brand, customers will be happy / proud to use your product / service. They also will not hesitate to recommend the product to others.
What can you get by applying the concept of customer value? Lots! One of them is that you can determine the best price according to the benefits of the product.