Value and Satisfaction
Value in business markets is the worth in monetary terms of the technical, economic, service, and social benefits a customer company receives in exchange for the price it pays for a market offering.
When is something valuable?
what does it mean when something is valuable?
Is valuable only money related?
Value is in the eye of the buyer
The perceived value is the difference between the pain and the gain the buyer get.
When the Gain (benefits the customer gets from owning the product or using the service) is more than the Pain (too high price, too difficult to get, doesn’t solve the needs of the buyer, etc.), the customer is more willing to purchase the product or service. In case the Pain is more than the Gain, the customer is less interested in purchasing the product.
This is shown in the Value Proposition Canvas. On the right (round circle) is the perspective of the customer. On the left (square box) the product or service.
How is value created in marketing?
Value creation happens when a business or organization uses its work and resources to create something of value that is sold to a customer base. In turn, the business earns a profit for what it has created and the customers have a want or need fulfilled.
Value is not always money related!
The four types of value include:
- functional value,
- monetary value,
- social value,
- and psychological value.
Satisfaction
According to a Helpscout study, 80% of companies say they deliver “superior” customer value. However, only 8% of customers agree with that assessment.
The more satisfied your customer is, the more change that they will buy another time in your store.
How Customer Satisfaction can be Measured
A common used method is the Net Promotor Score.
The NPS consists of a single simple question:
“On a scale of 1 to 10, how likely are you to recommend our product/service to a friend?”
Explain why this question might give the most reliable review?
Why is value and satisfaction important?
Example Distribution Channel:
Every step between Producer and Consumer increases costs. As long as a wholesaler add value the producer will accept this extra cost location. However, when the wholesaler is only moving boxes without creating extra value, the producer might consider to cut out this middle-man to reduce costs (also called Des-Intermediation)
examples of created value by a wholesaler:
- wholesalers can provide unique value-added services, such as packaging, remanufacturing and treatments
- Wholesalers might take care of repair services, prices, location etc. that satisfies the needs of the producer, so the producer can stay focused on production.
Summary: Value and Satisfaction
Customer value is the difference between the total benefits expected from a product/service and the total costs incurred to obtain that product or service.
On the other hand, customer satisfaction refers to the difference between the actual performance experienced by a customer and the expectation of the customer.
By being relevant for your customer and creating value for them with a high satisfaction, the opportunity of extra purchases and returning customers increases.
When your company doesn’t create value or satisfaction it will be des-intermediated and cut out of business.
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