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Customer Value: What it is and How Your Business Can Build it

We all know that a successful brand is one that delivers value to its users. The higher your value proposition, the greater the level of customer satisfaction and this is the key to success of any business. Customer satisfaction can be represented by a metric called customer value. How to optimize this index and build a business image in the eyes of consumers? First of all, let’s get to know the customer value definition. 

What is customer value?

Customer value is the totality of benefits that customers receive during the process of learning, purchasing and using products/services. Those values include the benefits of the product/service itself such as utility, features, etc., complemented by the brand’s value proposition and the customer experience throughout the process of learning, buying, using, and maintaining. 

Customers come to a purchase decision after determining whether they receive enough value for the price of the product or service. 

The importance of customer value

Customer value is one of the important indicators of marketing. After determining what it is, we consider the roles of this indicator in marketing as follows:

  • An enhanced form of products and services.
  • Plays a vital role in the marketing strategies of businesses, especially large enterprises with a high level of brand awareness. The more established a business, the more value they bring to their customers. 
  • Creates a great advantage in the competition with competitors, profoundly influencing customers’ decision to act.

Knowing how to price your product or service fairly and in accordance with their value proposition will help your business reduce friction, win customers, and increase customer loyalty. 

How do you measure customer value?

In a simple equation, customer value is as the difference of benefits and costs.

Customer Value = Benefit – Cost

It is important to note that ‘cost’ does not only refer to tangible cost (cash, checks, interest, etc) of the product or service, but it could also include intangible cost, such as time, effort and mental effort that customers spend during their customer journey.

Similarly, there are different types of benefits that influence a customer’s purchase decision.  

These benefits lie not only in the features and uses of the product, but also in the brand value proposition. Branding plays an important part in enhancing customer value. As perceived benefits increase and cost decreases, customer value proposition increases accordingly.

Identify perceived benefits


Total Customer Benefit is determined by evaluating the following items:

  1. Product benefit – the basic attributes of the product such as quality, design, functionality, packaging and cost savings.
  2. Services benefit – the support services offered alongside the product. These may include pre-sales and post-sales customer services such as delivery, installation, warranties, servicing and guarantees.
  3. Personnel benefit – the value added by company representatives during the sales process to overcome customer objections and facilitate a sale.
  4. Image benefit – the value proposition to a customer of increased image and reputation achieved by being seen to own and use the product. Image benefit is often gained directly as a result of enhanced brand equity. Hence it is an important foundation of building consistent customer loyalty. 

 Estimate the total cost

Total customer cost is comprised of the following elements:

  1. Monetary cost – the price paid for the product or service by the customer.
  2. Time cost – the cost to the customer in time spent in the decision making and buying process such as searching, evaluating, purchasing and delivery lead times.
  3. Energy cost – the degree of physical effort expended by the customer while searching for, evaluating, buying, installing, using and receiving delivery of the product.
  4. Psychological cost – the cost related to any dissatisfaction and frustration experienced by the customer during the evaluation and purchasing journey.

Since you’re working with tangible and intangible variables, the formula above won’t look like a typical math equation. You can only measure the total customer benefits and compare them to the total cost to make sure the former outweighs the latter. 

Additionally, customer value proposition might vary depending on your customer segment. Different buyer persona perceives the same sets of value differently depending on their current needs, problems, and goals. Therefore, you should start segmenting your customers into different buyer personas and calculate the value proposition for each group of customers. 

How to generate customer value


  • Develop valuable ideology and culture for your business

Ideology and culture are much harder to change, and it’s also harder to compete. Products and systems can be easier to copy than it is to change the mindset and culture of the company. For long-term success, ideology and culture are important long-term factors that will set you apart from your competitors. Ideology and culture, together with systems, help create great customer experience and values.

  • Understand your customer’s journey

Creating customer value enhances customer satisfaction and experience and vice versa. To create true value, you must be aware of what your customers consider valuable. Customer lifetime value can change throughout the customer journey. They will become aware of the value you provide when they are first introduced to your product or brand, and this will change as they begin to interact with your product, service, staff, and even other customers.

Mapping a detailed customer journey will help you identify gaps and opportunities to provide timely solutions and add value 

  • Collect customer data

Getting to know your customers is a continuous process. Customers’ needs and behaviors do change and so should your process and system. Collecting real-time data overtime will help you gain valuable customer insights and make decisions accordingly to constantly refine and improve their experience and journey. 

To conduct this activity, you will need access to both quantitative and qualitative customer data. Management teams will have facts and statistics to back up their proposed changes, so leaders can make decisions with confidence knowing their perceived value matches their customer base.

  • Focus on more than just price

While it is true that price is one of the main factors customers take into consideration when making purchasing decisions, there is more to a product or service than its monetary value. To create true value, you must be aware of what your customers consider valuable. You must understand how customers view your competitors’ products. What factors are important to help customers make purchasing decisions? Price versus benefit, which is more important? Are you good at delivering what your customers consider important? Can you deliver more than your competitors based on these factors? This is why marketing strategies and communications are vital to gathering customer feedback and understand them.

  • Leverage customer retention

You might think once someone has become your customer, they’re able to perceive and receive the customer value that you offer. While this might be true, you shouldn’t forget to refine and level up the value of your product or service.

A lot of businesses utilize customer loyalty programs to offer even more value, benefits, and convenience to their existing customers. Coupled with data collection and analysis, businesses will be able stay attentive to the ever-changing needs of their customers and provide timely solutions that satisfy them. 

Loyal customers also, in turn, bring value back to your business. Since 93% of customers read reviews before making a purchase, having loyal customers write reviews and testimonials for your product or service will enhance your value proposition. 

Customer value is influenced, not forced

Remember your customers will never buy something because you think it is outstanding. They buy because they like or need them. Value is not something you can force. 

Establishing and communicating value is important because the results of your efforts are measured by the customer’s perception of the value you bring to them.

Remember the last time you decided to go out to eat without thinking about your destination. You compared the value of similar restaurants while trying to make a decision. It is completely based on subjective perception.

Because it is so subjective, customer value can only be influenced – never controlled. Therefore, it is important to always note that the stronger your relationship with your customers, the greater their perceived value.


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