So, Larry goes out to the market to buy a washing machine. Seller A offers Larry “The best washing machine in town,” with good horsepower and a sleek new design. Seller B offers Larry a smartly designed, German-engineered washing machine, with 5 HP, 14 lbs. capacity, and one year warranty.
Which machine do you think Larry would end up buying? Which machine would You, as a consumer, prefer and what are the factors that influenced your buying decision? As a buyer, you will prefer a product that offers better value for your investment. This is exactly what Customer Value is. Simply put, customer value is the evaluation of the advantages and disadvantages of a transaction, made by the consumer himself, or in other words, a personal pros and cons list of a product.
A common misconception is that customer value only refers to monetary investment. Although the monetary transaction is a major part of this equation, customer value also considers product quality, services offered, cost, marketing, and packaging. The customers invest not only money but also their time, effort, trust, and energy. More importantly, they are actively choosing you over the other players in the market. This is why customer value is such a crucial component of a good marketing strategy.
Customer Value can be classified into five distinct categories.
Determining customer value is a crucial business metric. It allows brands to allocate costs efficiently and also gives forecasting insights as well as feedback on the efficiency of their marketing strategies. It enables brands to identify their target group, retain customers, and provide a better customer experience.
If customer value were an equation, it would be
Customer Value = Benefits – Cost
In short, when the total customer cost is deducted from factors that are deemed as ‘benefits’ by the customer, the remainder is called customer value. The difference between product benefits and price is the customer’s inducement to buy the said product.
Listed below are five strategies that will empower you to create value for your customers.
1. Explore the Option of Loyalty Programs
The purpose of loyalty programs is to keep the customer engaged with the brand for as long as possible. Loyalty programs are a great way to show gratitude and appreciation to customers by offering exclusive deals, discounts, and other incentives that window shoppers and occasional buyers wouldn’t get. A report on customer loyalty by HubSpot reported that almost three-quarters of consumers are more likely to refer brands with loyalty programs to people they know while 79% are more inclined to repeat their purchases from these companies. To know more about optimized loyalty solutions, click here.
2. Add Value to Overall Customer Experience
Customer experience is a huge factor in the creation of customer value. If a customer is unhappy with the brand, including the product service itself, or finds the customer experience to be unsatisfactory, they are very unlikely to return to the brand. Consistently working on creating an unparalleled customer experience has long-term benefits and enhances brand image.
3. Targeted Marketing
It is also crucial for brands to not waste their marketing campaigns (and budgets) on the unwilling, or a disinterested audience. You, as a brand, must ascertain that you are consistently marketing to target groups that are already customers and loyal to the brand.
4. Concentrate on Customer Retention
Your prime focus as a brand must be to retain existing customers and keep them content. Consumers that express the desire to cancel subscriptions are showing an inclination toward alternate brands, which you will want to curb.
5. Keep Customers Engaged with Valuable and Relevant Content
Sharing valuable and relevant information projects a company as an expert in certain subject matters. Value-driven content builds a positive brand image and improves the brand’s credibility in the long run.