# Customer Value Customer Value = difference between what a customer pays for a product/service and the **benefits they receive**. ## Understanding Customer Needs - Fundamental to a successful business - Customers are why businesses exist - Creating a customer-oriented culture can be a competitive advantage ## Customer Oriented Culture - Customer-In Culture - Customer involvement throughout the entire [[value-chain]] of business - Actively uncovering customer needs - Advocating the "voice of the client" internally, continuously - Holding a "customer is always right" mindset - Customer satisfaction is measured, monitored and actioned - ~~Product-Out Culture~~ - Internally focused - Customers are not considered in the product or service development process - Arrogant -- "We know better" - Financial goals come first, second and third in terms of priority, no balance ## Economical Value - Tangible monetary savings over its long-term use. - Consider Total Cost of Ownership or Lifecycle Cost - Compared with existing product or service being used by customer. ## Functional Value - Customer value created by **features** that create **functional benefits** - Customers utilize a **Multi-Attribute Model** for comparisons - Features - Defined by the **seller/engineers** - What the product/service offers - Watch out for *"feature fatigue"* - Benefits - Defined by the **customer** - Drive buying decisions ## Experiential Value Also known as psychological/emotional value. - [[brand|Branding]] - Represents immense psychological value to customer - Allows premium pricing - Signals quality, status and image - Design -- Build a bond for long-term loyalty - Emotional Benefits -- Build a bod for long-term loyalty - Customer Experience and Service -- Front-line employees are critical ## Social Value - Network Effects - The more users, the more value increases - Preference Formation - Consumer preferences are heavily influenced by their peers - The popular becomes more popular - Social Capital ([[ugc|UGC]]) - Users feel they should reciprocate with content - Users feel empowered by offering content - Social Relationships