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How to Deliver Customer Value

Customer value = happy customers

What is customer value and how do we maximise it?

Customer value is not prescriptive or standard but is the value that is derived from a product or service, as perceived by the customer. This may well be different for different customer groups and it can be defined with the following ‘equation’;

Customer Value = The Benefit – The Effort – The Risk – (The Price)

Benefit – The benefit that provides the perfect solution to a problem or need

Effort – Using insight to understand and adapt to what makes customers lives more convenient

Risk – Any perceived downside to purchasing i.e. quality, peer group opinions, time, availability

Price – This is in brackets because it should be accompanied with a word of caution. Countless surveys have been conducted, all of which consistently throw up the following information regarding price;

In Developed Markets, 90% of people prefer to buy on non-price based motivations

In Un-Developed Markets 60% of people prefer to buy on non-price based motivations

It is very easy to lower prices but extremely difficult to raise them, so price should only be used very tactically.

So to maximise Customer Value, we need to increase the Benefit and reduce the Effort, Risk (and Price), all of which is achieved through the three core marketing strategies of Branding, Segmentation and Differentiation.


Why Bother With Marketing

Marketing is more than just shouting messages

I was asked this by a friend of mine recently, and because of what I do, my first reaction was to take slight umbrance at the suggestion that marketing could be anything but worthwhile.

However on reflection I thought that it was in fact a very good question to ask, and one which I am sure most marketers don’t stop to think about, so I considered it properly and want to share  the following thoughts.

To understand why you should bother with it, you first need to know what it is. To my knowledge there is no one single and accepted definition of marketing, but I like to think of it as the following;

“Marketing covers all activity that combines to deliver a positive customer experience across all aspects of their interaction with a product or service.”

From large advertising campaigns to answering the phones promptly and professionally, when your business interacts with a customer you are marketing to them, as a result of which they will take away an impression of your company. You can make sure that it is a positive one.

So, why bother with marketing? Well there is only really one reason really; To enable you to sell your products or services at the highest price possible.

And to sell at the highest price you need to seek out and deliver Customer Value