When you identify how customers perceive the value of your products or services in comparison to your competitors, you will be empowered to improve the attributes most beneficial to customers and maximize the value they get from your product or service offering. It’s also a crucial step when it comes to market validation.
Value is determined through the customers’ eyes. It is a measure of your product or service’s worth compared to the price they pay for it. In a recent survey, 84% of customers say that a good experience is as valuable as a product or service.
Customer value analysis is a five-step process, and the third step is our main focus. This step assesses your company’s performance and your competitor’s performance with respect to the attributes valuable to customers.
In order to understand the third step, let us briefly describe the five steps of customer value analysis (CVA).
The five steps in customer value analysis
Before deciding which competitors to compete with, and which ones are not a threat to you, the steps listed below will let you discover what is valuable to customers and how they rate you against your competitors.
Step 1 – Identify what customers look for in a product or service and how they select who to buy from.
Step 2 – Assess the importance of the attributes by asking customers to rate them in order of importance.
Step 3 – Compare your performance against your competitors with respect to attributes customers consider important.
Step 4 – Examine how customers in a particular segment rate your performance against a specific competitor based on a single attribute they value.
Step 5 – Revise customer values over time as the product features change or as the economy and technology shift.
Accomplishing these five steps will help you decide whether you should compete against your top competitors, your fastest-growing competitors, or your most innovative competitors.
The third step in customer value analysis
The third step, which is our key focus, involves assessing your enterprise’s performance and competitor enterprises’ performance with respect to the attributes valuable to customers.
Why focus on the third step in customer value analysis? Because it is the step that will help you strategize how to come up against the fierce competition in your industry. 59% of business leaders and executives say that the market is much more competitive, with a 16% increase since 2020.
By relying on customer feedback like reviews, surveys, and other research methods, a competitive analysis (analyzing your competitors) will help you compare the differences between your competitors’ products or services, and your own products.
A competitive analysis will also help you identify what your competitors are doing right or wrong, which will help you establish a marketing strategy that will deliver value to customers and beat your competitors.
How do you implement the third step?
You implement the third step in customer value analysis by conducting a competitive analysis. The analysis will require you to research and find answers to the following questions:
Who are your competitors?
Are they direct—offering a similar substitute to your product or service, or are they indirect—offering different products from yours which still satisfy the customers’ needs?
Which products or services do they offer?
Analyze the quality of their products or services, their pricing, discounts, and other perks they offer. Free shipping, loyalty programs, and giveaways are examples of perks that attract customers.
What are your competitors’ sales tactics?
Track their sales process, their annual revenue, whether they have multiple locations, and reasons customers give for buying or not buying from them.
What is their content strategy?
Do they have a blog, podcast, or webinar? How frequently do they release new content and what visuals do they use on their content to attract customers?
Which technology are they using?
Tools like Built With, reveal your competitors’ technology. Their job listings may also mention tools candidates need to be familiar with. This will give you ideas on the technology they use.
Do customers engage with their content?
Discover how engaging their content is by looking at the likes, shares, and retweets. Find out which topics receive more attention from customers.
What are the results of their SWOT test?
A SWOT (strengths, weaknesses, opportunities, threats) test of your competitors is a goldmine to your enterprise. The information you get will enable you to discover areas you can use as opportunities to outshine them.
How can your enterprise increase customer value?
Since each customer’s needs, goals, and expectations are different, calculate customer value by segmenting your customer base into various buyer personas.
Once you have calculated the customer value, you can then implement it through customer service in the following ways:
- Analyze your customer experience by creating a customer journey map that outlines every step they take, which makes it easier to spot opportunities where you might add value.
- Don’t focus only on the price, find other ways to add value, like meeting their need for functional products, or giving them an amazing user experience.
- Refine your value proposition. Numbers upon numbers of businesses are offering what you have. Create value by clearly communicating what sets your products or services apart from your competitors.
- Increase value for your loyal customers. Yes, they are loyal, but you can increase their loyalty through additional benefits like loyalty programs.
- Segment your audience based on what they value and tailor content, products, and services according to their specific needs.
When you provide value to your customers, you create customer satisfaction.
Customer satisfaction should be the foundation of your enterprise. It leads to repeat purchases, loyalty, and word-of-mouth referrals.
The third step, which was our main focus, deals with how customers compare your products or services against your competitors.
By taking the feedback that customers provide in this step, you can begin the journey to competitive analysis (analyzing your competitors) and discover ways to up your game and provide more value to your customers.
Case study – Kapacity.io
A customer discovery process for Kapacity.io was done through a series of workshops that involved listing potential customer segments, building a sales narrative, and working with an actual customer from a selected customer segment.
Working with the customer helped us validate the sales narrative and edit the materials based on the feedback we received. The team was able to form new ideas which benefited Kapacity.io.
Insight gained: Kapacity.io’s product is solid, but there is some difficulty selling it to homeowners. There is a need for productization to make it easier to show customers the value this product offers. With this in mind, we can now productize Kapacity.io’s offering by defining which services they will offer and how they can deliver the message to customers.