CUSTOMER VALUE HIERARCHY

Let’s get a bit academic. According to Karl Albrecht, a leading thinker in the services marketing area, customer value is best thought of as a hierarchy. This hierarchy is going to determine the perceived value of a certain product or service in terms of what the consumer expects and does not expect from the purchase experience. I will use a hotel as an example to explain each level of customer value.

1.       Basic customer value

It encompass all the requirements of doing business. In other words, it is the fundamental component of your value proposition to be in business. At the basic level, a company provides essential core attributes that customers need. If this basic level is not provided, customers will not buy the product. However delivering it will not generate competitiveness in the market.

In our hotel example, a clean bed is part of the basic value that the company can offer.

2.       Expected customer value

At this level the company provides attributes that customers take for granted. A company providing attributes at the expected level is only providing an average standard service; there is nothing better about the service offer compared to the competition. Customers may only be moderately satisfied, and there is no incentive to return or recommend this company.

Expected attributes of a mid-scale hotel might be an efficient check-in or availability of a bar/restaurant.

3.       Desired customer value

Involves what the customer would like to have from the purchase and service experience. According to Destination Marketing's website, desired value presents the first opportunity for a small business to move ahead of competitors by giving the customer desirable add-on features to the purchase and service experience. Companies providing the desirable offer are competing more effectively than most of their competitors.

The friendliness of the staff, the quality of the food and the efficiency of the service are examples of attributes that customers know, but do not always expect.

4.       Unanticipated customer value

At the unanticipated level companies offer customers ‘delightful and surprising’ attributes that demonstrate outstanding service quality. These features can help a small business win consumer loyalty over the competition and generate repeat sales over time. Companies operating at the unanticipated level can be said to delight their customers with memorable experiences, and are achieving a significant advantage over their competitors. The difficulty with providing unanticipated levels of service all the time is that customers begin to expect these delightful surprises, and competitors copy them.

Examples might include imaginative decor and fittings, staff who perform exceptional service, or cuisine with unforgettable taste sensations.  

As we can see the marketing implication should go beyond the basics and expectations and strive to offer truly superior customer value by providing desired or unanticipated values.

Albrecht, K., 1994. Customer value, Executive Excellence. Sept. pp. 14-15.