What Is Customer Value and How to Measure it (With Benefits)

By Indeed Editorial Team

Published 7 September 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Customer value refers to the feeling of contentment and satisfaction a customer may experience when they engage with a business's product or service offerings. Where customer value is high, repeat purchases, loyal customers and positive word of mouth are more likely. Understanding how to calculate how much a customer values a particular product or service can help you understand which of a business's offerings may be the most profitable. In this article, we explain what customer value is, share how to measure it, provide ways to improve it within a business and describe its benefits.

What is customer value?

Customer value is how a customer perceives a business's offering. How they value a product or service can depend on the benefits they experience from using it and whether they feel they receive adequate merit for the money they spend on it. It's usually important that customers feel that they have received good value for money. If they do, they're more likely to make repeat purchases. Providing value for money can be a great way for a business to grow its customer base, increase its customer retention and enhance its competitiveness against other businesses with similar offerings.

Understanding the value that particular products or services provide to customers can help a business decide which products or services to sell. For example, if customers provide positive feedback on a particular product or service, a business can feel safe promoting it in future marketing campaigns. If customers aren't happy with the quality of a particular product or service or believe that it's overpriced, a business can decide to discontinue it or work on a better pricing structure.

Related: How to Identify Competitors and Benchmark the Business

How to measure value for customers

Measuring the value a business's product or service provides to customers can encompass many things. Here are some ways you can measure it:

1. Identify the benefits

One of the best ways to measure the value an offering provides a customer is to think about which characteristics of the product or service the customer may consider a benefit. Going through this process can help you understand which aspects of the offering a customer sees as a reason to make a purchase. There are many benefits you can look for in products and services to measure the value they add to customers including, user experience, customer satisfaction, sustainability, warranty and durability.

2. Review the costs

Reviewing the costs of a product or service can help you understand how much value it may add to a customer. Costs can include monetary costs or the time it takes for a customer to purchase a product or make use of a service. It's a good idea to adopt a competitive pricing schedule when selling products or services to attract customers to a business. There are plenty of costs a customer may face when purchasing a product. These may include the purchase price, subscription renewal expenses and the time taken to assemble a product, for example.

3. Use a customer valuation equation

A formula you can use to complete a customer valuation is:

Total Customer Benefits - Total Customer Costs = Customer Value

Using this formula involves identifying all benefits and all costs associated with acquiring a product or using a service. Consider a jumper made from 100% wool. The benefits might be its warmth, comfort and durability. The costs might be the price of the jumper and the time associated with going through the online ordering process. Here, the business can perceive the jumper as having a positive value for its customers, as the benefits outweigh the costs.

Related: Customer Satisfaction Surveys (Including Example Questions)

Ways to improve a customer valuation outcome

There are many things businesses can do to improve customer valuation outcomes. You can find some of them below:

1. Create a value proposition

A value proposition refers to the value a business promises to deliver to its customers when they buy their product or use their service. This forms part of the business's overall marketing strategy. An effective value proposition can highlight the positive traits of a product or service and convince customers ‌it can add more value to their lives than its competing products or services can.

Related: Marketing Campaign Management: Definition, Types and Value

2. Personalise customer support interactions

When a customer calls a business for product support or sales advice, it's helpful if the business can provide them with personalised service to enhance their experience. To offer personalised service, consider utilising a customer context tool to gather customer data and observe a customer's purchase history and any interactions they've had with the business. Collecting this type of information can allow customer support officers to provide a valuable service to customers and make them feel understood and valued.

Related: 17 Customer Service Skills: Definitions and Examples

3. Provide multichannel support options

To deliver an effortless user experience, businesses can provide support to their customers via multiple channels. These channels may include email, live chat, phone or an online help desk. To make customer support more effective, you can identify the channels the business's customers use most often and adopt them. You can also implement software to link all support channels so that when a customer calls, support officers can access any emails customers have sent to the company or any online chats they've had previously. This can help customer support officers deliver more personalised and accurate support.

4. Listen to customers

To ensure customers feel valued, businesses can invite them to offer their feedback and then implement that feedback. This may include, for example, sending a customer a survey once they make a purchase to see if they had a positive experience or if they have any suggestions for improvements. After collecting feedback, it's usually beneficial for a business representative to follow up with the customer to thank them for their feedback and potentially tell them how the business plans to incorporate their feedback to improve the customer experience.

Related: Active Listening Skills: Definition and Examples

5. Offer incentives

To help attract new customers to a business, it can be a good idea to implement an incentive system. This might include, for example, rewarding new customers with a special gift when they make their first purchase. Incentive systems can also be loyalty programs for existing customers. For example, free upgrades to a superior product for 12-month subscription renewals. It can be beneficial for incentives to be periodic or limited to create a sense of urgency and exclusivity.

6. Consider aspects beyond product or service pricing

It can be a good idea for a business to identify elements of its products or services that customers may find value in other than the price. While a good price might make customers feel inclined to purchase a product or use a service, a larger factor in their purchasing decisions might result from their perceived value of a product or service. Because of this, a business can enhance the way customers perceive various products or services by highlighting the benefits they offer. These benefits may include usability, easy access to solutions and relation to a renowned brand or company.

Related: How to Design a Brand Identity (With Elements and Steps)

7. Enhance the purchasing experience

A quick, easy and secure purchasing experience can increase the value a business's products or services offer its customers. Creating a buyer's journey that's seamless and free of obstacles can leave customers feeling fulfilled and satisfied with their purchasing experience. An example of this is making sure that the checkout page is straightforward and easy to complete and that the payment system is secure and simple to use.

Related:

  • 12 Good Customer Service Examples

  • How to Improve Customer Service Management (Steps and Tips)

Benefits of increasing value for customers

There are many ways a business can benefit from increasing the value their products or services offer their customers. You can find some of the most common ones below:

  • Increased profit: When customers feel valued by a business, they're more likely to become repeat customers and also recommend the business's products or services to their social circle. This can help a business increase its profits as it retains its existing customers and generates a stream of new ones via word of mouth.

  • Satisfied customers: Customers who receive quality products and experience excellent service are likely to feel satisfied with their experience. Satisfied customers are likely to practice brand loyalty.

  • Boosted market share: Increasing customer worth can make it easier for a business to sell its products or services. This can enhance competitiveness and can also increase shareholder value.

  • Enhanced reputation: Building an excellent reputation can be vital for a business's growth. If customers favour a brand or business because of its great reputation, they may choose to purchase its products or use its services even if its prices are higher than its competitors.

  • Maximised trust: When customers feel valued by a company, they're likely to trust the products the company sells or the advice it gives. Building customers' trust can be a great way to encourage customer loyalty and ongoing sales.


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