Customer perceived value
|Customer perceived value|
Customer Perceived Value (CPV) is the subjective assessment of a customer’s perception of the relative worth of a product or service, based on the combination of their expectations, needs, and satisfactions. CPV is the overall evaluation of whether a customer perceives a product or service to have a relative worth that is in line with their financial investment and expectations. It is a measure of the customer's satisfaction, and it is the key factor in determining the success of a business. CPV is the benchmark for customer satisfaction, and it helps managers to understand how to increase customer loyalty, loyalty and retention. It is essential to understand customer needs and wants, as well as their perceptions of a product or service in order to create a high CPV.
Example of customer perceived value
- A company that offers a subscription-based software service for a low monthly fee is providing a high level of customer perceived value. Customers are able to access the software without having to purchase it, and the low monthly fee is an attractive incentive for them.
- A restaurant that offers a meal deal that includes a complete meal of an entrée, a side dish and a drink for a low price is providing a high level of customer perceived value. Customers are able to enjoy a complete meal at a low price, making this an attractive incentive for them.
- A clothing store that offers a buy-one-get-one-free promotion on a certain item is providing a high level of customer perceived value. Customers are able to purchase two items for the price of one, making this an attractive incentive for them.
- A manufacturer of electronics that offers a warranty on their products is providing a high level of customer perceived value. Customers are able to purchase the product with the assurance that, should something go wrong, the product will be repaired or replaced at no additional cost. This is an attractive incentive for consumers.
When to use customer perceived value
Customer Perceived Value (CPV) is an important tool for businesses to measure customer satisfaction and loyalty. CPV can be used in many different applications and contexts to identify areas for improvement and to ensure customer satisfaction. Here are some ways that CPV can be used:
- To determine the value of products and services – CPV measures can be used to assess the perceived value of products and services in comparison to their cost, and to understand the competitive dynamics of a particular market.
- To inform pricing strategies – CPV can be used to understand the competitive environment and to inform pricing strategies for products and services.
- To assess customer satisfaction – CPV measures can be used to assess customer satisfaction with a product or service, and to identify areas of dissatisfaction.
- To inform promotional campaigns – CPV can be used to determine the most effective promotional campaigns and to understand how a product or service is positioned in the market.
- To measure brand loyalty – CPV can be used to measure brand loyalty and to identify areas for improvement.
- To understand customer needs – CPV can be used to understand customer needs and expectations and to develop targeted marketing strategies.
Types of customer perceived value
Customer perceived value is an important concept that helps managers understand how to increase customer satisfaction and loyalty. There are three main types of customer perceived value:
- Functional Value: Customers perceive a product or service to be valuable if it meets their needs and provides them with the desired outcomes. Functional value is determined by the performance, features, and usability of a product or service.
- Emotional Value: This type of value is based on the customer’s feelings about a product or service. Customers may attach an emotional value to a product or service if it is aesthetically pleasing, has nostalgic value, or offers personal benefits.
- Symbolic Value: Symbolic value is based on the customer’s perception that a product or service has a greater value than its price. Customers may attach symbolic value to a product or service if it is associated with a certain lifestyle, or if it is a status symbol.
Steps of customer perceived value
Customer Perceived Value (CPV) is a key measure of customer satisfaction, and it is essential to understand how to create a high CPV. The following steps can help to achieve this:
- Establish customer expectations: It is important to understand customer needs and expectations in order to create a product or service that meets their requirements.
- Develop customer loyalty: Loyal customers are a valuable asset to any business, and it is important to create strategies and incentives that encourage customers to stay with the business.
- Measure customer satisfaction: Regularly measuring customer satisfaction helps to identify areas that need improvement and allows businesses to make changes to improve CPV.
- Monitor customer feedback: Monitoring customer feedback is essential to ensure the customer’s expectations are being met and that the product or service is meeting their needs.
- Evaluate customer perceptions: Evaluating customer perceptions of a product or service is key to understanding their relative worth and making changes to increase CPV.
- Improve customer experience: Improving the customer experience is essential to create a positive perception and increase customer loyalty. This can be done through providing excellent customer service, offering discounts, and providing incentives.
Limitations of customer perceived value
Customer Perceived Value (CPV) is an important factor when assessing customer satisfaction and loyalty. However, there are some limitations to this measure, including:
- It is a subjective measure, meaning that it can be difficult to accurately measure since it is based on a customer’s individual perception.
- CPV can be affected by external factors such as the economy, competitors, and social trends.
- It can be difficult to accurately quantify the value of a product or service since it is often intangible.
- It can be difficult to measure the long-term impact of a product or service.
- It does not take into account the total cost of ownership or the customer’s entire experience with the product or service.
- It does not take into account the customer’s emotional or psychological experience with the product or service.
- It does not take into account the customer’s loyalty or commitment to the product or service.
- Lin, C. H., Sher, P. J., & Shih, H. Y. (2005). Past progress and future directions in conceptualizing customer perceived value. International Journal of Service Industry Management, 16(4), 318-336.