How to Define and Calculate Value for Customer Interactions


Share on LinkedIn

That is not just a bad attempt at a pun, it is a reality of what people through times have thought of value. There are many “types” of values: legal, economical, ethical, quantitative, qualitative, and financial value – just to name a few. There are also issues of perceived, realized, and corroborated value, subjective and objective value, and partial and total value.

This is not an exhaustive list. If you ask Google for a definition of value, you get a summary page with links to 14 different places where value is defined differently. There is a web site ( which only purpose is to provide quotes related to value, going back to centuries before our time.

There as many definitions of value as there are people in this planet.

Value has become the latest “fuzzy” metric in organizations. We tried with Satisfaction and Loyalty. Their definitions were set, but we could not figure out how to measure them correctly. We are now focused on delivering value to our customers. Problem is, or rather the opportunity exists because, nobody can provide a clear, transferable definition of value.

My take is that value is a perception of worth, derived from each party that takes part in an interaction. It can change from interaction to interaction for the same person. If I am thirsty, I place a higher value in a drink, if I a hungry on food, and if i am tired on a place to sleep. I like Maslow’s pyramid to explain the process humans follow to determine value at different stages in their life – but still cannot be used to explain value in each transaction. Each person and each organization will see different value in different interactions, often changing from one to the next one.

Value is not a static definition.

You cannot create value for your customers, the way you perceive value, and ask them to take it. They are going to get value from your offerings, as per their needs and perceptions. You cannot define value you get from your users as being the same across all interactions, across all transactions. You are going to get different values from different users at different times.

Is there a way to define value? You have to follow three steps to define value:

  1. Create two definitions of value. First, create one to define the type value you’d like to get from a transaction, and another to determine the type of value you want to offer your customers (type of value refers to what category – a lower price is an economic value, a better experience is either an emotional or logical value, etc.). Focus on what you can measure, that is the value you perceive as receiving.
  2. Define the metrics for the value you are going to extract from each transaction. When measuring value, and because it changes so easily, it is best to use correlated metrics. For example, if you want to track the financial value produced by new revenue from a specific marketing campaign, you then have to measure revenue per transaction, then cross-tab it with the revenue produced as a results of a specific marketing campaign, and deducting the costs for producing that campaign and conducting those specific transactions.
  3. Create a benchmark metric. In the above example, once you measure the financial value of a certain number of transactions you can then create an average value for that transaction. That becomes the benchmark you use to measure that specific transaction. As deviations occur you will determine that you are receiving more or less value from that specific transaction and can adjust accordingly.

How do you calculate value? How do you perceive value as a customer? As an organization? Do you have a better way to define value?

Esteban Kolsky
ThinkJar, LLC
Esteban Kolsky is the founder of CRM intelligence & strategy where he works with vendors to create go-to market strategies for Customer Service and CRM and with end-users leveraging his results-driven, dynamic Customer Experience Management methodology to earn and retain loyal customers. Previously he was a well-known Gartner analyst and created a strategic consulting practice at eVergance.


Please use comments to add value to the discussion. Maximum one link to an educational blog post or article. We will NOT PUBLISH brief comments like "good post," comments that mainly promote links, or comments with links to companies, products, or services.

Please enter your comment!
Please enter your name here