Customer Perceived Value: Expectations That Must Be Managed Effectively
In 1980 Ray Kordupleski successfully delivered the idea of Customer Value Management his book, Mastering Customer Value Management. Value can be defined into several meanings. Value can be in the form of tangible or intangible things. Intangible means that value forms a unit equivalent to benefits based on the economic value of the product, for example the price of a product for tangible goods. Intangible means that the value can only be felt by users, for example, a satisfaction with a service.
Value itself is created through development and an increasing process journey. Value is also part of the culture and vision of a company. Although the culture and mindset of employees in a company can be difficult to change, emphasis on creating better customer value and customer perceived value must be done every time.
Customer perceived value is the perception of product value or service value in the eyes of customers compared to other products or services as an alternative. Perceived value here is defined as whether the customer feels that he or she receives the benefits and services for what has been paid (cost). Or it can be formulated in the form of a formula: Customer Perceived Value = Benefit — Cost.
The cost we are talking about is not just a number. When buying a product, customers also spend more than just the cash they transact on the company’s products or services. Companies must consider what they pay in terms of time, energy, comfort and so on.
For a customer, benefits can vary and can shift the value of the product. Perceived value for one customer may not be the same as for another customer. What is important to one customer, may not be important to another customer segment. Product benefits may include product quality, benefits to product ownership, pride in the brand and company affiliation, access to customer solutions, product experience and knowledge, and the success of using the product or service.
Customer perceived value can change during a customer’s journey. Since the beginning, after the customer is introduced to the company’s product or brand, the customer will form a perception. Of course, customer knowledge and perceptions will change after customers start interacting or making use of the company’s products or services with various intermediaries such as employees and connecting with other customers. Communicating a value and determining customer value is important because customer perceived value can be measured by understanding this.
How do you increase customer value?
Customer perceived value is very subjective because it is really based on the perceptions of an individual customer. Customer perceived value can be influenced but cannot be controlled. Thus, what the company needs to do is make efforts so that customer perceptions are positively influenced by the products the company offers. Basically, customers already know what will interest them. They already have subconscious obsessions. They already know the problem they are having and may even know the solution they will need. Companies only need to understand what drives the creation of a perceived value for customers. Good customer research, including surveys and speaking or listening to customers’ voices, can help uncover what they most importantly need or want.
Distribute a Unique Value Proposition
Consider all the businesses out there offering the same product the company is offering. With similar products, customers have no choice but to make subjective choices. The company’s unique value proposition is a way for the company to win customers. Companies need to communicate what makes the company’s products different and have added value and continue to strive to increase the value proposition to be able to provide distinguishing and superior characteristics of the company compared to other companies. The method can be as follows:
1. Identify what the company owns and controls,
2. Clarify the unique value proposition in all company communications to each customer,
3. Ask customers why they buy the company’s products, use this customer feedback to increase the company’s value proposition,
4. Calculate the company’s product value with real data,
5. Communicate the benefits of the company’s services so that customers can see its real value.
Segment your Customers
Customers in different segments will have ideas about different values, and what is important to them. Rather than trying to show the same value proposition to all customers, the best step is to identify what makes the different segments move and want to buy the company’s products. Value proposition will vary based on seasonality, geography, demographics, and / or specific product attributes. Segment customers based on what they value and customize the communications the company will deliver for each of these customer segments. What adults perceive as a value, for example, can be very different from the scores in the adolescent age group. If the company already has a suitable target market, then find out what things’ customers will value most.
Don’t Compete on Price
If a firm tries to compete only on price with its competitors, it will often lose. Cost is of course a major factor for customers, but many people are willing to pay more if they can see the added value and feel like they are getting value for the money they paid. Satisfied customers and already feel the value in the company’s product offerings, not only will they be willing to pay more, they will also be willing to talk to the company or potential new customers about the company’s products.
Conversely, customers who are not satisfied and have not seen the added value in the company’s products, they will go elsewhere, even though the company is already offering the product at the lowest price. Set a price that makes it clear that the customer receives the entire value of the product, and also maximizes the company’s acceptance. At a point, but not the lowest, companies can communicate product value at a fair price to customers who make price comparisons while shopping.
By increasing customer value, it is hoped that the company will get customer loyalty for the long term and will certainly help increase the company’s market share optimally.
Author:
Tiurida Lily Anita
Totok Sugiharto
The authors are Student and Visiting Lecturer in the Doctor of Economics Program, Concentration of Service Management at the Faculty of Economics and Business, Trisakti University Jakarta
