Yes, you heard it right. Customer value and satisfaction are the “make it or break it” factors in your business growth. Today’s businesses set out to address the customer’s problems so customers are at the heart of everything we do.
There are various parameters to measure the success of a business. However, customer value and customer satisfaction are paramount to lead you down on a profitable road.
If you are wondering about the difference between customer value and satisfaction, here is the answer.
What are customer value and satisfaction?
It’s proven that defining and delivering customer value and satisfaction can bring you enormous benefits. Before that, let’s get to know the general notion of what they are all about.
Customer value is present when a customer perceives that they will get a certain value from a product or service that they intend to buy. Mathematically, the value is calculated by subtracting the cost involved to purchase the product/service from the total benefit the customer receives.
The cost before making a purchase includes the cost of the product, time and effort spent to understand the product, emotional stress, etc to name a few. Total benefits here imply the customer experience, product quality, customer service -- everything a customer benefits from this purchase.
Customer satisfaction, on the other hand, gauges the level of satisfaction a customer feels after buying a product of using a service.
Each customer has different expectations so it’s really hard to define customer value and satisfaction.
Building customer satisfaction and value is also another tough task, however, by understanding their nature, you can have a clearer picture of how to do improve them.
4 Differences between customer value and customer satisfaction
If you are wondering if there is any difference between customer value and customer satisfaction, the answer is, yes, they are quite different concepts. And here is how:
Customer value is the benefits a customer gets after subtracting all the cost and effort involved to buy the products/services.
Customer satisfaction emphasizes how satisfied a customer is compared to what they expected.
#2 Buying process
Customer value is incurred in the perception of customers before making purchase decisions. If they find they will get more benefit than the cost, time, effort they spent, then they will buy it. Otherwise, very unlikely that they would make a move.
Customer satisfaction is only present after customers have bought something. The degree of satisfaction depends on various things during their purchase from page load speed, customer service to after-sales service, or return policy.
#3 How they are calculated
Customer value is a quantitative concept as you can measure the cost and put it in monetary terms. As for customer satisfaction, it’s subjective to each customer and can’t be monetized. It’s a qualitative element so you can only ask your customer how they feel about their purchase to understand how your services are delivered.
#4 How they are used
Consumer value and satisfaction are used for different purposes.
Customer value helps you define what cost and effort are spent to acquire your products and information related to those products such as communication systems, pricing, reviews, etc. Thus you can look further and improve these factors.
Customer satisfaction is more likely defined by customer service, customer interaction, loyalty program, reward point program, guarantee or return policy, etc. So if you are looking to improve customer satisfaction, these are what you should look into.
To improve how you perform, it’s essential to understand customer value and satisfaction expectations then make sure what you provide is up to par.
Customer value and satisfaction example
Example of customer value
Grab - the leading taxi-hailing service in South East Asia is a good example of delivering customer value. The value or benefits customers receive are clear:
- You get to know the price beforehand
- You get away from the cash payment
- Your location is exactly defined
- You are offered a great reward point program to gain different tier benefits and many discounts
With little cost (probably some mobile data) and effort, you get access to a super convenient service.
Example of customer satisfaction
Transferwire - a payment platform where you can keep, send, receive money from different currencies. As a newcomer to this platform, there are a lot of unknowns to their service. However, the website is simple to navigate, instructions are clear and divided into specific steps. You just need to follow it. The verification process is quick and you get responses after uploading your documents in real-time. That’s super easy and quick!
The relationship between customer value and satisfaction
There is a relationship between customer value and satisfaction. They are highly related to each other and both help your business to grow.
Customer value leads to customer satisfaction. Once a customer perceives they will gain benefit from a product, they will make a purchase. With customer service and after service perfectly delivered, customer satisfaction will be achieved. You can’t just get customers satisfied if they don’t buy in the first place. So customer value is the key to lure customers to your door and start their buying journey.
Customer satisfaction increases customer value. Say, a customer bought a product from your store, and thanks to the exceptional service, he/she is convinced to repeat the purchase. As (s)he has gone through the whole buying process with you, (s)he knows (s)he will gain great benefit and convenience, so the cost/effort involved is less and the customer value increases.
Therefore, it’s crucial to understand the relationship between customer satisfaction and customer value and differentiate their nature to apply it wisely into your business.
Conclusion - delivering customer value and satisfaction
Creating customer value and satisfaction is key to keep a customer stay with you in a long run. Before setting out to improve these metrics, you need to explain the relationship between customer satisfaction and customer value to better improve your system and service. You can also use customer value and satisfaction in marketing as testimonials to spread good images of your business to the public!