While customers love sales and finding a good deal, 86% of buyers are willing to pay more for a great customer experience. Understanding where customers place value is key to being able to design products and services that will meet their needs and stand out in the marketplace.
The value of a product or service varies greatly depending on several factors. Some of these factors include the price of the purchase, the experience associated with the product both before and after the sale, the lifetime value of the product, and the support experience should the customer need to contact the company helpdesk for assistance.
What is a customer value proposition?
A customer value proposition is how businesses define the value that is generated through their products or services offered to potential customers. It is a promise that companies make to customers that they will receive certain benefits from purchasing from that company. Customer value propositions explain why customers should buy a certain product or service and what a company’s competitive advantage is over its competitors.
Highlighting a strong value proposition is important for attracting the attention of customers. The selling point for specific products and services needs to be tailored to the needs and wants of a target audience. To do this, businesses need to analyze their competitors’ offerings, have a deep understanding of their target customers’ needs, and not only create a quality product, but understand how to properly promote it in relation to the market’s supply and demand.
How to measure customer value
Calculating the customer value of a service or product is helpful to better understand the perceived value that customers will feel they have received following their purchase. The keyword here is “perceived” value and costs. Especially in industries such as SaaS, customers seek solutions to problems that they face, and they will measure the value of a service based on whether or not it fulfills their needs and addresses their problems.
The formula to calculate customer value is the difference between the sum of all benefits minus the sum of all costs. The result is the worth of said product. The important question here is, “do the customers feel like they received more benefits from the products or services they purchased than what they paid?”
One way to answer the question is to collect feedback from customers on their perceptions and experiences. Regularly collecting feedback from customers helps companies better understand their customers’ needs and expectations so they can make changes and continually improve their products and services.
7 types of customer value propositions
The customer value proposed by companies varies widely depending on the industry, target customer, and kind of product or service. In order to make sure that your company offers a good value proposition, you must first understand some of the main areas where you can offer value to customers.
The main idea for this first type of value is that you are making the customer’s life easier thanks to your product or service. An example of this would be services like TurboTax which seek to simplify the complex and confusing experience of doing one’s taxes. It’s a service that creates value by “making life easier”.
Promoting lower prices than competitors is an obvious, yet effective value proposition. In a world where customers can access and compare services with the click of a button, maintaining competitive pricing has become a mandatory part of defining a company’s value proposition.
Promoting more efficient products is especially important for machines, for both industrial and everyday uses. “Higher efficiency” is often thrown around as a differentiator for the latest electric car or new washing machine model in the sense that these machines can go further or work for longer while using less energy, which results in lower costs for the end-user.
4. Customer experience
Customer experience is a critical part of most products and services, and companies certainly agree. In fact, 81% of companies see customer experience as a competitive differentiator. Many companies go to great lengths to ensure an exceptional experience. Just look at Disney and the level of detail the company puts into every theme park, store, and service provided.
Earning the trust of customers has become increasingly important, especially in the tech industry. GDPR compliance, cloud hosting, and cybersecurity measures are just some of the elements that companies need to consider and provide information on to assure customers that using their products and services is safe and secure.
Customers have an ever-increasing choice of products and services, yet they also expect that purchases from different vendors will still be compatible and able to be used together. While many everyday products have become standardized over time to avoid compatibility and sizing issues, this remains a key differentiating factor for SaaS solutions. Compatibility with existing technical environments and CRM systems is an essential IT requirement when choosing solutions.
The results that a customer sees after using a product or service is an important factor for them when they decide whether they want to remain a customer and whether they would recommend the product to others. Some types of results that will increase the customer value proposition include reducing project costs, increasing team productivity, reducing machine downtime, faster problem resolution, and increasing customer satisfaction.
Case study: Nike
Nike’s world-famous footwear is one of the best case studies to look at a company that has seen immense success thanks to its great value proposition. Nike focuses on four main value propositions for customers: accessibility, innovation, customization, and brand/status.
The company is accessible not only in terms of its global presence but also in the wide variety of options that it offers to target customers engaging in all types of outdoor activities.
Innovation is a part of the heart and soul of Nike. The company focuses a lot of its marketing and promotion on emphasizing its efforts to constantly innovate to release new and unique models of sports shoes that enhance performance.
Customization is similarly clear to any customers who have shopped at Nike online. One of their main offerings is the ability to custom design a pair of shoes based on the color and style preferences of the customer.
Finally, the company has also put great effort into building its brand and status. It often works with A-list artists and sports stars to promote its brand and drive product demand.
Enhancing live support with video assistance
For consumer products, one of the best ways that companies can distinguish themselves from the competition is through their customer support services. Offering omnichannel support options is useful so that customers can interact with companies in whichever way they prefer. One channel of communication that has been increasing in popularity is real-time video assistance.
When a customer experiences problems after buying a product or service, video chat solutions can help support agents better understand and visualize the customer’s issue. Many video assistance solutions, like ViiBE, offer an array of collaborative and AR tools during video calls to help troubleshoot complex issues from a distance. The best of these tools are also web apps that require no download so that they can easily be accessed by customers at the click of a button.
Using live video during customer support interactions allows agents and customers to see each other’s faces and hear their voices, making it easier to communicate empathy and gauge the customer’s emotions. These solutions reduce the number of support experts that need to be sent on-site, promote customer self-service, and improve customer satisfaction.
Video assistance solutions can work as standalone support tools or be integrated into existing ticketing and CRM systems. They can also help track customer-focused KPIs like First Call Resolution (FCR) and Net Promoter Score (NPS). The top software options also include knowledge management capabilities so that documents, pictures, messages, and videos can be stored in a ticket archive and then accessed by an agent at a later time if another customer experiences a similar issue.
Customer value propositions are explanations of how companies present their products or services as having more value in certain areas as compared to their competitors. This is important since customers make purchasing decisions based on the difference between the perceived value and perceived cost of a product or service. There are several types of value that companies can use to promote their products and some companies, like Nike, combine several key elements into their value proposition strategy. An easy way to add immense value to the customer after-sales experience is to integrate video assistance tools into the support process. Web app solutions like ViiBE are easily accessible, resolve customer problems quickly, and help measure the customer’s perceived value by tracking NPS after every call.