Both in B2B and in B2C, ‘value’ has several meanings. Most often, it defines a monetary price for a service or a product. But buyers pay a lot more for a product than money. They also pay in knowledge, time, and data.
What constitutes customer value, and can businesses build and leverage it?
In this article, we'll cover:
What Is Customer Value?
‼️ Customer value is a perception of what a service or a product is worth to customers against a business’ competitors. It is an umbrella term that describes emotional, technical, economic, and/or social benefits gained by paying for a service or a product.
Customer value is counted by subtracting total customer costs from total customer benefits. When implementing the formula, it is important to include all service aspects:
- Brand reputation.
- Convenience of the service.
- Well set-up mobile experience.
- Approach to communication.
… and the resources customers spend while making the purchase:
- Emotional investment.
- Time spent on the decision.
- Data given up and so on.
What is the process of creating customer value?
Focus on Customer Experience
PWC estimates 32% of customers stop dealing with a brand they love after one bad experience, and US businesses lose up to $35.3 billion every year due to customer churn. Setting customer experience as one of the corporate values can help businesses prevent churn and grow their revenue, as 86% of buyers agree to pay more for a higher level of service.
Gather Customer Data
Data is one of the ways customers pay for a service they get:
- An email address for a subscription.
- A telephone number for a loyalty program.
- A physical address for a swift delivery and so on.
80% of customers prefer purchasing from brands with personalized offers. Developing the product in accordance with customers’ needs adds more value to it.
Sustain Existing Customer Relationships
A successful business can do both: attract new customers and retain old ones. This is impossible without a continuous process of ensuring a growing customer value.
Retaining loyal customers is easier and cheaper than gaining new ones. There is no need to explain the value of the product — your loyal customers already know everything about it. By enhancing the existing relationships, brands can turn loyal buyers into brand advocates.
Leverage Your Understanding of Value
The best ways to leverage customer value and experience is to:
- Provide personalized services to existing customers or improve their overall experience.
- Develop different loyalty programs for different consumer groups.
- Put data into perfecting the product in accordance with the latest requirements of the customer base.
- Justify the price of the product with its quality.
Increasing Customer Value: Best Practices
There are several ways a business can increase its customer value.
Go Through Your Customer Journey and Improve It
To increase customer value, a business should understand whether its customer journey is worth the price and effort.
To understand the justification behind customer value and see the ways to improve it, take the journey yourself. What are its bottlenecks? Which stage has the highest rate of cart abandonment? Where is the bounce rate the highest? By going through every step yourself, a professional can ensure a smooth journey and the fullest understanding of the process.
Focus on Feedback
Microsoft estimates 53% of shoppers do not believe businesses act on their feedback in any way. This not only influences the satisfaction level, but decreases customer value.
Creating a system of gathering and processing of customer feedback is beneficial for both buyers and the business:
- Customers will feel heard and appreciated, which will raise the level of their trust towards the brand.
- Businesses will be able to increase their customer value by making consumers a part of their processes.
Focusing on feedback will give businesses a possibility to add more product benefits such as ownership advantage, success of use, and various long-term perks.
Appeal to All Customers
To avoid risks, businesses need to appeal to all groups of all demographics and make sure customer value fits everyone.
One of the best ways to add customer value is to develop the product in accordance with the modern requirements and technology and still make it easy to use and update. This way, the product will appeal to both youth and older customers, creating customer value across the board.
Segment Your Customer Base
Appealing to everyone is difficult without understanding what each customer group needs. Segmenting customers and surveying their needs could help businesses provide a better service for everyone due to deep understanding of the consumers’ needs and wants.
Segmenting customer base could be done according to different parameters:
- Frequency of use.
- How long the product or the service has been used by a customer.
- How much a customer has already spent on the product or service and so on.
By creating an adaptable product, a brand can increase the number of benefits and create a clearer customer value.
Improve the Quality of Customer Support
33% of customers say their number 1 reason to be satisfied with the service is a support team, resolving their issues in a single iteration. 95% of customers say a quality of service is the number one reason for forming brand loyalty. Increasing the quality of customer communication might be hard without a support as a service provider that can elevate the quality of customer service and support.
Establishing a justified customer value is not easy. By paying attention to feedback and data, any business can develop a formula that will provide it with a growing customer base and its customers with the highest level of service quality.
Anna has been working as a writer for 5 years. She previously wrote about financial markets, conducting the research on the state of bonds and stocks on a daily basis. She is a keen reader with interest in historical literature and international cuisine. Her latest obsession — customer communication and ways to perfect it. If you want to connect with Anna, follow her on LinkedIn.Posted on