Did you know that a staggering 76% of enterprises consider customer lifetime value (CLV) to be an important concept for their organization? To top it off, data by Forrester claims that experience-driven businesses can boost revenues by 1.4x and amplify the customer lifetime value by 1.6x than its counterparts. Clearly, understanding the ins and outs of customer value should take center stage for businesses.
So that the businesses can use it to their advantage, drive profit-oriented business outcomes, and boost user satisfaction. Without wasting much time, let's get started right away.
As the name suggests, customer value evaluates a product/service's worth. It also determines its 'value' by comparing the product/service to other alternatives.
The end-goal is to make your product/service' benefits crystal-clear to the customer and understand whether your customer feels that they received the right value for the amount paid to avail the product/service.
Let's look at some brands that have created a killer customer value proposition right from the start and are winning hearts in the process:
1. Uber's Customer Value Proposition: Offering The Uber Convenience
Notice how the brand's simple-yet-effective copy clearly demonstrates the 'value' that customers get while using Uber:
Key takeaway: It's nice to have creative, 'punny' content. However, your brand should prioritize communicating about its unique USPs instead of solely creating campaigns that leave users with a 5-second laugh.
2. Apple's Customer Value Proposition: Offering A 'Unique' Experience
This topic is incomplete without mentioning Apple iPhone's 'unique' positioning. Interestingly, the brand uses aspirational words (such as magical) to describe the experience of owning an iPhone in addition to demonstrating the truly unique features that come with the phone, such as enhanced security:
Key takeaway: Again, notice how the messaging is consistent and simplifies the fairly complex topic - 'encryption' - quite effectively. The content is to-the-point and undoubtedly demonstrates Apple's benefits of using the phone instead of solely focusing on the phone's features itself.
3. Crazy Egg's Customer Value Proposition: Offering Meaningful Answers To Intuitive FAQs
Plenty of elements stand out on Crazy Egg's website page, starting with how the website:
Key takeaway: Sometimes, it's good to directly lay down your unique propositions as clearly and easily as possible, especially if your product/service is niche and technical in nature.
These were the examples that come to mind that have set an industry benchmark in this space. Moving on, let's look at how you can measure customer value, why it's important, and how you can boost your marketing strategy with a customer value proposition that's as unique as your brand.
It can be easy to put a price tag on your product/service and evaluate your customer value solely from the revenues and profits streaming in. However, this approach is incorrect and well, incomplete.
When a customer buys your product, apart from the money they pay, you also have to account for the customer's 'perceived benefits' of the product in addition to factoring in their time, effort, and emotions that they put while making the purchase.
So the real question then becomes - how can you measure the customer value? Keep reading to understand this three-step process:
Step 1: Figure out the customer-centric benefits. To get you started, think along these lines when charting out the benefits your customers might be receiving on using your product/service:
And so on.
Step 2: Identify the total costs involved.
Largely speaking, your costs will be of two types: tangible (think: product/service price, installation and onboarding cost, maintenance cost, renewal costs, etc., and intangible costs (think: time invested in buying product/service, poor customer experience and brand reputation, physical or emotional stress from buying or installing your product, etc.).
Step 3: Calculate the customer value. Here's the customer value formula:
Customer Value (CV) = Total Perceived Customer Benefits (B) - Total Customer Costs (C)
Please remember a couple of pointers when using this formula:
We've established the fact that selling your product/service by solely focusing on the 'price point' will not guarantee long-term sales or help you develop strong customer relationships.
That said, let's look at the top-4 reasons as to why the customer value gains precedence over all other factors:
1. Allows you to 'connect' with your customers on the same wavelength
When looking for a product/service, customers don't necessarily have a specific product in mind. What they're looking for is a seller who can help them with the necessary insights, perspectives, or solutions to their query in mind and, in turn, build trust in the brand. This is where customer value comes into play.
As a brand, your CX team should respond to questions in time and with patience. If you talk about your product early on, your customers may get annoyed.
Hence, your team should drive meaningful discussions filled with actionable insights with your user so that the former can offer customized solutions of real value, gain the user's trust, and complete the sale.
2. Can be customized as needed depending on your customer's needs
Customer value has different meanings for different customers. For example, one customer may choose to shop with Amazon because of their one-day delivery convenience, whereas another may find Amazon competitive from a price standpoint.
As a brand, you should focus on your customer value as it can be customized based on your user's needs time-and-time again.
3. Allows you to understand who your lifelong customers are
Determining your customer value allows you to laser-focus on important customers such as the ones who provide repeat business, high-value referrals, among others. Furthermore, this targeted segmentation allows you to unearth integral value points which you can use to drive sales and motivate your prospects to become loyal customers.
4. Creates a sense of urgency in the customer's mind and drives the sales forward
Your brand can create a timeframe around the benefits such as faster delivery, increased efficiency, etc. What this does is that it convinces the customer to close the purchase and leverage benefits.
Key takeaway: It is critical that your CX team focuses on value-oriented sales and customizes the sales process according to every individual's needs. This leads to stronger customer relationships and more repeat, long-term sales.
We know that customers spend a lot of time, effort, energy, and money when engaging with your brand. So, providing a meaningful customer value to the customer in return only seems to make logical (and business) sense.
In fact, most customers end up self-evaluating your company's worth (whether consciously or subconsciously) across interactions and purchases made.
So keeping tabs on the perceived customer value (from the customer's perspective) is the key to outshining your competitors. Additionally, customer value throws light on important questions that are necessary for every brand's survival, such as:
And so on.
Key takeaway: Customer value allows your brand to appreciate customers beyond the transactional level and approach users strategically.
On the other hand, it allows your customers to view your product/service as something more than a pure amalgamation of product/service features--it could be intangible, social, and emotional benefits such as an utterly comforting experience, an aspirational feeling on owing your product or even simply enjoying user convenience at competitive costs.
We've looked at the theory part of creating a customer value, let's move on to the more practical, 'how-to' bit:
Before you even get going on redefining your customer value, it makes sense to evaluate your customer experience by building a customer journey map that allows to visualize the pain-points, interaction points, communication channels, etc. in your customer's journey and add value along the way:
This map could be as detailed and as specific as you like. Once you have all the data at hand, you are better prepared to create a value proposition that:
When it comes to demonstrating your customer value, you cannot embrace a "one-size-fits-all" approach. Instead, try understanding what makes your different audience segments tick, what their unique characteristics are, and redefine your value proposition accordingly.
You can create a reliable customer persona by considering various factors when segmenting your audience, such as location, season, interests, demographics, product attributes, among others:
The customers of today don't solely remain loyal to brands that offer the 'lowest' price. Customers want to see real value for their money's worth, even if that means that they end up paying a little extra.
Tying back to the previous point, you need to focus on customers who engage in repeat purchases and drive high-quality sales. This is where audience segmentation comes in handy.
You can also focus on your customer acquisition efforts and look at interesting ways to retain your existing customers instead of acquiring new ones, which can be financially rewarding.
You could have the best value proposition in the world, but if it doesn't deliver on all the tall promises made, your customers will lose interest.
To counter this, try this surefooted strategy that allows you to show gratitude to your customers and appreciate their association with your brand: Offer free giveaways, extra service, sample products, etc.
You can also create customer loyalty programs and focus on offering unparalleled convenience through varying payment modes, lightning-fast delivery, quality performance, etc.
Cutting to the chase, whether you're a B2B company or a B2C enterprise, drafting a winning customer value proposition lays the foundation for successful branding and long-term customer relationships.
Plus, it literally sets your brand apart in a sea of sameness and allows your customers to engage with your brand willingly and wondrously.
So try these time-tested hacks and give your customers more than what they expect at every step of the customer lifecycle journey. You won't be sorry for all the efforts you put in.
It's not uncommon to go on a website today...
As Covid-19 continues to create havoc in our personal...
News insights you won’t delete. Delivered to your inbox weekly.