8 Myths About Customer Value


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Here are some common ideas posted in blogs, and what is factually correct

1. Satisfaction is the reason why people buy.
People buy because a product or a service is worthwhile to them versus competitive products or services. Satisfaction is a necessary condition but not a sufficient condition for purchase. Sometimes, we buy even when very dissatisfied.

2. High-value products have low satisfaction.
This implies value is price, and that if something is high priced it has low satisfaction. This is confusing value for price. Sometimes, people pay “money for value” which means they buy high priced items.

3. Low-value products have high satisfaction.
This implies value is price, and that if something is low priced it has high satisfaction. This is just not true. It has been proved that at every price point, Customers look for Value. What does that mean: If buying a pen, whether a Mont Blanc or a Bic, the Customer is looking for Value, and buys on Value.

4. Satisfaction measures Customer Value.
Customer Value and satisfaction studies are different. Satisfaction measurements are done on transactions and generally right after the transaction by the user. Normally the top two boxes are measured. Customer Value studies are done a few weeks after the transaction and on the decision maker, not necessarily the end user, so as to get embedded perceptions. Customer Value studies are done versus competitive alternatives and are ratios.

5. Value means benefits:
Value is what the Customer gets (benefits) vs. cost (price and non-price) versus competing offers. While colloquially we use Value to mean benefit or price, Customer Value is the actual worth of a product versus competing options.

6. Values and Value are the same.
Values are what someone stands for: ethics, morals, sustainability. Value is defined above. In fact, Values create Value.

7. Customer Value is newer than Customer Experience.
Both are old concepts. However, the formal usage is more recent. Customer Value as a discipline started in the 1980s with Ray Kordupleski and AT&T, and CX in the 2000s.

8. NPS is a great measure of what the Customer perceives.
NPS only answers a couple of questions on repurchase and recommendation. It does not portray what Customer thinks of the product and whether he has had a good or poor experience. NPS is better used with other Customer metrics.

Why are these misconceptions propagated and misunderstood? My take is that most people tend to follow what they are told, rather than delving deeply into the actual meaning of, and truly understanding how, these concepts should be used. These concepts are used and understood loosely.

My suggestion to the lay reader is to truly understand what each of these terms means, how they are used, and how they should be used. Reflection from one’s own experience will show what I am saying makes sense. (Remember your favourite restaurant or airline, and if you are dissatisfied, will you stop using them?)

One reason why companies and executives are not truly becoming Customer–centric is that such loosely used and understood terms confuse companies, and do not give the company true insight into what will really help. Thus just measuring NPS and stating that it tells the company what to do is misleading, and will prevent the company from truly improving.

Executives and consultants should review what is being measured by or being followed in companies, and take corrective measures to make companies more customer-centric.

Gautam Mahajan
Gautam Mahajan, President of Customer Value Foundation is the leading global leader in Customer Value Management. Mr Mahajan worked for a Fortune 50 company in the USA for 17 years and had hand-on experience in consulting, training of leaders, professionals, managers and CEOs from numerous MNCs and local conglomerates like Tata, Birla and Godrej groups. He is also the author of widely acclaimed books "Customer Value Investment: Formula for Sustained Business Success" and "Total Customer Value Management: Transforming Business Thinking." He is Founder Editor of the Journal of Creating Value (jcv.sagepub.com) and runs the global conference on Creating Value (https://goo.gl/4f56PX).


  1. Agree with all of your perspectives, especially the caution that should be used around metrics like NPS and CES.

  2. Number one is SO true. I may not necessarily like a bag of bread for some time because I found it to be moldy, but that doesn’t mean I’m not gonna buy that brand of bread again. Everyone gets second chances.

  3. Fantastic article. . . so often at the executive level a catchy buzzword sparks a flury of activity around a concept . . . the reality is that there are many practices, disciplines and methodologies that truly form the “art” of our craft.

    Thank you for taking the time to shed some light on some important (yet subtle) nuances of customer service and the customer experience. Nicely done!

  4. Quite a well-written article. I agree with all the points mentioned, especially the conclusion that talks about how businesses grapple to become customer-centric, in spite of putting in a lot of efforts in this direction. Just as you said, they simply do not realize that their endeavours are based on loosely understood principles of customer value. In my opinion, once businesses get a precise understanding of the concept of customer value and support their customer service strategies with robust CRM solutions – they can immediately attain the goal of becoming truly ‘customer-centric’.

  5. Patricia, thanks. While I agree with you, how do we get businesses to undertand the concept of customer value?

  6. Michael, thanks.
    Tripp: appreciate your agreement.
    The problem is getting people to really look at the customer nuances as they really are, and not what buzz words say.

  7. This is very helpful! I agree with every one of them. Thanks for this contribution! There are so many myths and it helps our field when they are debunked and we operate with truths!

  8. Thanks, Chip.
    One more myth is that processes should drive the Customer interaction. There is a place for processes for standardisation and efficiency. But processes do not replace mind-set changes so important for the customer thinking.

  9. The best way to make businesses understand the concept of customer value is by asking them to step into the shoes of the customers. Once done, they just need to subtract the product cost from the product benefits to find out the customer value of their products. Having an exact idea of what value their products/services are offering to the customers, they can implement strategies to further increase it.


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