Customer Value

Customer Value = difference between what a customer pays for a product/service and the benefits they receive.

Understanding Customer Needs

• Fundamental to a successful business
• Customers are why businesses exist
• Creating a customer-oriented culture can be a competitive advantage

Customer Oriented Culture

• Customer-In Culture
  • Customer involvement throughout the entire value-chain of business
  • Actively uncovering customer needs
  • Advocating the “voice of the client” internally, continuously
  • Holding a “customer is always right” mindset
  • Customer satisfaction is measured, monitored and actioned
• Product-Out Culture
  • Internally focused
  • Customers are not considered in the product or service development process
  • Arrogant — “We know better”
  • Financial goals come first, second and third in terms of priority, no balance

Economical Value

• Tangible monetary savings over its long-term use.
• Consider Total Cost of Ownership or Lifecycle Cost
• Compared with existing product or service being used by customer.

Functional Value

• Customer value created by features that create functional benefits
• Customers utilize a Multi-Attribute Model for comparisons
• Features
  • Defined by the seller/engineers
  • What the product/service offers
  • Watch out for “feature fatigue”
• Benefits
  • Defined by the customer
  • Drive buying decisions

Experiential Value

Also known as psychological/emotional value.

• Branding
  • Represents immense psychological value to customer
  • Allows premium pricing
  • Signals quality, status and image
• Design — Build a bond for long-term loyalty
• Emotional Benefits — Build a bod for long-term loyalty
• Customer Experience and Service — Front-line employees are critical

Social Value

• Network Effects
  • The more users, the more value increases
• Preference Formation
  • Consumer preferences are heavily influenced by their peers
  • The popular becomes more popular
• Social Capital (UGC)
  • Users feel they should reciprocate with content
  • Users feel empowered by offering content
• Social Relationships