In business, customer value creation is the ultimate goal as this is the key to earning customer loyalty, increase in profits, market shares, price and therefore repeat business. In short, customer value creation sells your product or service with more ease. That is why, if you’re just starting your business, it is important that you understand how customer value creation works.
Definition of Customer value
So, what is customer value creation?
You may think that customer value relies heavily on monetary benefits in exchange for quality products but it is much more than that. It is the perception of the worth of a product or service compared to alternative offerings. And its definition encompasses the measure of all costs and benefits, including money, time, energy and emotional costs associated with the product or service. Customers today are no longer as concerned with the price and quality in terms of value so much as their experience and how much the product or service meets their needs and helps to resolve their problems When a customer believes their life becomes easier by using your product or service, the more likely they are to patronise your business hence increasing your profits.
How customer value is created
Customer value creation refers to the process of turning labour and resources into something that meets the needs of a specific group of customers who recognise the value and worth of the product or services you are offering. In a way, value creation is offering solutions through the product or services that benefits the customers. An example would be setting up a website where customers can do their grocery shopping and have it delivered on their doorstep on the same day. This solves the hassle of personally going to the stores to buy the products needed.
Here are some other ideas to help you create customer value:
- Giving discounts on products and services when customers reach a certain amount of purchase;
- Having reasonable prices that would help the customers believe they are getting more than what their paying for;
- Making sure the quality of the products or services are nothing less than the best;
- Creating convenient ways for the customer to buy and pay for the offered products;
- Paying attention to the experience of the customers intending to make them feel valued.
These ideas are general ideas but will help you understand what your customers need and value.
Bear in mind that value creation is subjective and is influenced by many factors like culture, beliefs and environment. The example given above would most likely create value for customers that have little time to spare for grocery shopping in their schedules and to those that believe it would be more convenient to do the online grocery shopping than in-person shopping. Therefore, in creating customer value one must also take into consideration the culture, beliefs and environment of your target consumers before actually proposing a product or services.