Customer Value , Satisfaction and Customer Delight .

 CUSTOMER VALUE :

The difference between what a customer gets from a product, and what he or she has to give in order to get it.

Customer value is the benefit that a customer will get from a product or service in comparison with its cost. 

This benefit might be measured in monetary terms, such as when a product helps save the customer money that would have been spent on something else. 

A benefit also can be difficult to quantify, such as the enjoyment that a customer receives from a product or service. The term "customer value" should not be confused with the value of customers to businesses. 

It refers to the value that the customers receive, not to how valuable customers are.

Customer value is defined as :

                                  Value = Benefits - Price.

Realization vs. Sacrifice:

"Realization" is a formal term for what customers get out of their purchases. Sacrifice is what they pay for the product or service.

Some business people explain customer value as realization compared with sacrifice. 
 

CUSTOMER VALUE : TYPES - 

1. Desired Customer Value:

Desired value is the third tier of customer value hierarchy and involves what the customer would like to have from the purchase and service experience. 

According to Destination Marketing's website, desired value presents the first opportunity for a small business to move ahead of competitors by giving the customer desirable add-on features to the purchase and service experience.

For example, a retail location may provide a consistently friendly customer service experience with staff willing to hunt around the store with the customer to find the right outfit or specific clothing item.

2. Unanticipated Customer Value :

Unanticipated value for the customer is receiving a service or purchase experience that the customer literally does not expect. 

These features can help a small business win consumer loyalty over the competition and generate repeat sales over time.

For example, providing satisfaction guarantees on all purchases or hiring staff with significant expertise in the business' industry can provide a customer with a service experience that exceeds both expectation and desire in terms of value.

  CUSTOMER VALUE PROPOSITION :

In marketing, a customer value proposition (CVP) consists of the sum total of benefits which a vendor promises a customer will receive in return for the customer's associated payment (or other value-transfer).

The two main attributes that allow consumers to differentiate among products are price and quality.

Finding the correct balance between these two attributes usually leads to a successful product. If a company is able to produce the same quality product as its direct competition but sell it for less, this provides a price value to the consumer.

Similarly, if a company is able to produce a superior quality product for the same or a slightly higher but acceptable price, the value to the consumer is added through the quality of the product. A product must offer value through price and/or quality in order to be successful.

IMPORTANCE OF CVP :

1. A good customer value proposition will provide convincing reasons why a customer should buy a product, and also differentiate your product from competitors.

2. Gaining a customer's attention and approval will help build sales faster and more profitably, as well as work to increase market share. 

3. Understanding customer needs is important because it helps promote the product. 

4. Competitive Advantage -  A product with a successful consumer value proposition is directly linked to a product's actual and sustained performance versus competition. 

Target Audiences

1. End user -

The initial and ongoing satisfaction of the end user is the goal of every business. Customer satisfaction is achieved when superior customer value is delivered. Establishing a lasting business relationship will lead to future sales. Price and quality are the most important factors in a consumer purchase.

2. Manufacturer/Distributor – 

When the sales target is not the end user, but a manufacturer or distributor of a product, the most important factor is conveying superiority of one product over another. There may be other factors besides price and quality that would affect a customer's decision and communicating those as well is essential^.

TYPES OF CVP

1. All Benefits - 

Most managers when asked to construct a customer value proposition, simply list all the benefits they believe that their offering might deliver to target customers. 

The more they can think of the better. This approach requires the least knowledge about customers and competitors and, thus, results in a weaker marketplace effort.

2. Favorable Points of Difference - 

The second type of value proposition explicitly recognizes that the customer has alternatives and focuses on how to differentiate one product or service from another. 

Knowing that an element of an offering is a point of difference relative to the next best alternative does not, however, convey the value of this difference to target customers. 

A product or service may have several points of difference, complicating the customer's understanding of which ones deliver the greatest value. 

Without a detailed understanding of customer's requirements and preferences, and what it is worth to fulfill them, suppliers may stress points of difference that deliver relatively little value to the target customer.

3. Resonating Focus - 

The favorable points of difference value proposition is preferable to an all benefits proposition for companies crafting a customer value proposition. 

The resonating focus value proposition should be the gold standard. This approach acknowledges that the managers who make purchase decisions have major, ever-increasing levels of responsibility and often are pressed for time. 

They want to do business with suppliers that fully grasp critical issues in their business and deliver a customer value proposition that's simple yet powerfully captivating. 

Suppliers can provide a customer value proposition by making their offerings superior on the few attributes that are most important to target customers in demonstrating and documenting the value of this superior performance, and communicating it in a way that conveys a sophisticated understanding of the customer's business priorities.

CUSTOMER VALUE MODEL:

A customer value model (CVM) is a data-driven representation of the worth, in monetary terms, of what a company is doing or could do for its customers. 

Customer value models are tools used primarily in B2B markets where the choice of a given product, service, or offering is based primarily upon the amount customer value created.

Uses of customer value models

1. New product and service development and refinement:

 

The dialog and customer immersion that is part of a CVM is used to discover and determine which potential product features and functionality would create the most value for customers. 

 

This on-site interaction can be used to frame and define those features and functionality. Often a key is to focus on product or service capabilities rather than on features.

 

Successful CVM efforts change the basis of the customer-supplier product conversation away from features and functions and toward problems, benefits, and value.

2. Sales tools: 

 

CVMs can serve as a quantified statement of value and benefits for a customer that is used by the vendor sales staff to both sell into a new account, as well as to reaffirm and validate value created for current customers as a means to retain and grow current customer.

Customer value model methods :

There are several methods and approaches used to create customer value models.

All of these approaches appear to depend on substantial customer interaction and on-site interviews and observations of customers' challenges related to the product or service being valued.

The CVMs are of varying complexity. One consulting firm has found it useful to reverse-engineer customer P&Ls (profit and loss statements) to establish a clear connection between the product benefits and the customer bottom-line.

 CUSTOMER SATISFACTION :

The degree of satisfaction provided by the goods or services of a company as measured by the number of repeat customers.

Whether a buyer is satisfied after purchase depends on the products performance in relation to the buyers expectation , and whether the buyer interprets any deviations between the two .

If Performance falls short of expectation it is CUSTOMER DISSATISFACTION.

If performance is equal to expectation it is CUSTOMER SATISFACTION. (P=E)

If Performance exceeds the expectation it is CUSTOMER DELIGHT . (P>E)

PURPOSE :

 

"Customer satisfaction provides a leading indicator of consumer purchase intentions and loyalty." "Customer satisfaction data are among the most frequently collected indicators of market perceptions. 

The principal purpose is twofold:"

1. "Within organizations, the collection, analysis and dissemination of these data send a message about the importance of tending to customers and ensuring that they have a positive experience with the company's goods and services."

2. "Although sales or market share can indicate how well a firm is performing currently, satisfaction is perhaps the best indicator of how likely it is that the firm’s customers will make further purchases in the future. Much research has focused on the relationship between customer satisfaction and retention. Studies indicate that the ramifications of satisfaction are most strongly realized at the extremes."

 

IMPORTANCE OF CUSTOMER SATISFACTION :

 

• It’s a leading indicator of consumer repurchase intentions and loyalty.
• It’s a point of differentiation.
• It reduces customer churn.
• It increases customer lifetime value.
• It reduces negative word of mouth.
• It’s cheaper to retain customers than acquire new ones.

CUSTOMER SATISFACTION : MEASUREMENT

HOW TO MEASURE ??? 

1. Overall Satisfaction Measure (Emotional):

This measure's single greatest predictors of customer satisfaction are the customer experiences that result in attributions of quality.

Perceived quality is often measured in one of three contexts:

1. Overall quality
2. Perceived reliability
3. Extent of customer’s needs fulfilled

Dissatisfaction is synonymous with purchase regret while satisfaction is linked to positive ideas such as “It was a good choice” or “I am glad that I bought it.”

Example question: 

Overall, how satisfied are you with “APPLES I phone”?

This question reflects the overall opinion of a consumer’s satisfaction experience with a product they have used.

2. Loyalty Measurement (Affective, Behavioral):

In this measure customer loyalty reflects the likelihood of repurchasing products or services. 

Customer satisfaction is a major predictor of repurchase but is strongly influenced by explicit performance evaluations of product performance, quality, and value.

Loyalty is often measured as a combination of measures including overall satisfaction, likelihood of repurchase, and likelihood of recommending the brand to a friend.

A common measure of loyalty might be the sum of scores for the following three questions:

• Overall, how satisfied are you with [brand]?
• How likely are you to continue to choose/repurchase [brand]?
• How likely are you to recommend [brand] to a friend or family member?

Example question: 

Would you recommend “Apple I phone” to your family and friends?

This single question measure is the core NPS (Net Promoter Score) measure.

3. A Series of Attribute Satisfaction Measurements (Affective and Cognitive)

Affect (liking/disliking) is best measured in the context of product attributes or benefits. 

Customer satisfaction is influenced by perceived quality of product and service attributes, and is moderated by expectations of the product or service. 

The researcher must define and develop measures for each attribute that is important for customer satisfaction.

Consumer attitudes toward a product develop as a result of :

Product information or any experience with the product, whether perceived or real.

If product or service has been used by the customer . It is not meaningful to measure satisfaction when a product or service has not been used.

Cognition refers to judgment: 

• The product was useful (or not useful); 
• Fit the situation (or did not fit); 
• Exceeded the requirements of the problem/situation (or did not exceed); 
• Was an important part of the product experience (or was unimportant).

Judgments are often specific to the intended use application and use occasion for which the product is purchased, regardless if that use is correct or incorrect.

Affect and satisfaction are closely related concepts. The distinction is that satisfaction is “post experience” and represents the emotional affect produced by the product’s quality or value.

Example question: 

How satisfied are you with the “service” of your i phone?

How important is “price” in your decision to select Apple i phone?

4. Intentions to Repurchase Measurements (Behavioral Measures)

Behavioral measures also reflect the consumer’s past experience with customer service representatives.

 

Satisfaction can influence other post-purchase/post-experience actions like communicating to others through word of mouth and social networks.

 

Additional post-experience actions might reflect heightened levels of product involvement that in turn result in increased search for the product or information, reduced trial of alternative products, and even changes in preferences for shopping locations and choice behavior.

 

Example question: 

Do you intend to return to the (product) in the next 30 days?

 

 

 CUSTOMER DELIGHT :

 

Customer delight is surprising a customer by exceeding his/her expectations and thus creating a positive emotional reaction. 

 

Customer Delight directly affects sales and profitability of a company as it helps to distinguish the company and it’s products and services from the competition. This leads to Word of Mouth.

 

Customer Delight can be created by the product itself, by accompanied standard services and by interaction with people at the front line. 

 

The interaction is the greatest source of opportunities to create delight as it can be personalized and tailored to the specific needs and wishes of the customer.

 

During contacts with touch points in the company, more than just customer service can be delivered.

 

The person at the front line can surprise by showing a sincere personal interest in the customer, offer small attentions that might please or find a solution specific to particular needs. Those front line employees are able to develop a relationship between the customer and the brand. Elements in creating motivated staff are: recruiting the right people, motivating them continuously and leading them in a clear way .

PURPOSE : 

1. To make customers loyal. 

Finding new customers costs 4 to 9 times more time and money than reselling to an existing client. It is thus commercially intelligent to retain as many clients as possible.

2. To have customers that are more profitable-

Average delighted customers spend more with less hassle. As can be seen with the list of Van Setten, when all other elements are correct, clients accord less importance to price (as long as their perception of price remains reasonable).
 

3.Word of Mouth :

 

It is to have clients talk positively about your product, brand or shop.

In a world of well informed customers, 92% of customers consider word of mouth as the most reliable source of information.Delighted clients are a valuable source of advertisement for your company.

 

ZONE OF TOLERANCE:

It seems that customers have two levels of expectation:

• adequate - what they find acceptable
• desired -what they hope to receive.

The distance between the adequate and the desired levels is known as the 'zone of tolerance' 

 

The two levels may vary from customer to customer, and from one situation to another for the same customer. You can probably remember situations in which you have accepted services or products that, in other circumstances, you would have refused or been disappointed by.