Customer Value
Customer value is the total value a customer experiences when buying a product or service. This value arises from the balance between the benefits a customer receives and the cost he pays for them. The more benefits the customer sees relative to the price, the greater the customer value. Customer value can be divided into three main forms: functional value, emotional value and economic value.
What determines customer value?
Customer value is influenced by several factors:
- Functional value: This refers to the practical benefits and quality of the product or service. It is about how well the product works, how useful it is and whether it fulfills the customer's needs. For example, the durability of an appliance or the speed of an Internet connection contribute to functional value.
- Emotional value: The feelings and experiences evoked by the brand also play a major role. This can include how customers feel when using a product or service, such as the feeling of luxury with a premium brand or the connection with a brand that shares the same values. For example, brands such as Nike create emotional value through sports performance and by inspiring customers with their motto "Just Do It."
- Economic value: This is the cost-benefit analysis from the customer's perspective. It is concerned with whether the price a customer pays is commensurate with what he gets in return. This includes factors such as discounts, free extras or a longer product life, giving the customer more value for money.
Why is customer value important?
Creating high customer value is essential to attracting and retaining customers. When customers feel they receive great value in return for their investment, they are more likely to make repeat purchases and remain loyal to a brand. A brand that offers both functional, emotional and economic value often sets itself apart from the competition.
