CUSTOMER VALUE: RESIDES ON COMPANIES OR ON CUSTOMERS?

So far, I have analysed customer value as a group of characteristics attached to a company’s offering. It looks like the company can play with them to increase customer value. From my point of view, I wonder whether customer value is in the company’s hands. It seems to me that customers have the power to decide whether a company is delivering customer value or not depending on what they value the most.

The Customer and Leadership Blog, states that value does not reside in the product or service a company offer. Value is in customer’s mind. Each individual will perceive it in a different way. For example, a supermarket introducing home delivery service, will be much appreciated by a housebound customer than someone who enjoys visiting the establishment.

Well… Let’s say that customer value is in customer’s hands. Now we need to distinguish what kind of elements create customer value. Continuing with the previous blog, they describe 5 elements in customer value:

1.       Benefit.

The closer you offer is to the perfect solution for the job and the desired outcomes, the more benefit it deliver and the more value you create for your customer. As we have said above, each customer will have a different perceptions of customer value. To manage this situation it is important to detect different segments among the customer base.

2.       Effort

This element goes beyond the product benefits and focus on the ease and convenience of using a certain product. It is essential that the company pays attention to more than just product and service, in this case, we are talking about distribution channels and the whole usage process of the product as a key to increase customer value.

As stated by Fifield “Generally, there will be greater customer value attached to those offerings, where the organisation has spent time, research, effort and insight into finding new ways of making the old jobs easier”.

3.       Risk

The perceived value will be diminished when a great level of risk is attached to a certain product. The perceived risk is much higher when the customer has a lack of knowledge and prior experience in how best to get his job done.  And in particular how to judge the expertise of the supplier and the quality of the offer. Since we are risk averse, it is in the company’s hand to minimize this element.

4.       Price

Undoubtedly this is the most complex component of the customer value equation. There are innumerable variables to take into account when determining the price of a product or service. It is not a simple formula and depending on the price we decide for our product it will have multiple connotations. For example, we may think that a cheap product is always better from a customer’s point of view but they may link this with a low quality and prefer to buy something more expensive.

5.       Treatment

The last element of perceived customer value makes reference to service. Customers will always prefer to do business with organizations that leave them feeling “valued”.  Again we see how important customer service is.