How Do You Affect Customer Perceived Value?
Or maybe the question should be, how do your customers perceive the value of your brand, product or service? In most cases, the answer will be based on what your customer is willing to pay for that product or service versus a competitor’s. But, in creating this emotional perception, what are the factors determining this value? Is it the product attributes, design aesthetics, an intuitive user experience, customer reviews, or a lifetime of post-purchase customer support? As we’ll share below, there are ways to increase your product or service’s perceived value without impacting the cost to make it.
While some B2B and Direct-to-Consumer (DTC) products or services believe that their brand, product or service is defined first by price, it would be advantageous to understand how your product or service is solving three emotional pain points for your customer or consumer.
What’s Your Customer’s “Job”?
Clayton Christensen, the Harvard Business School professor and author of Competing Against Luck, says, “Customers don’t buy products or services; they “hire” them to do a job. Understanding customers does not drive innovation success,” he argues. “Understanding customers’ jobs does.” The book breaks this down into three dimensions of value:
Functional Value: How does this address my business/personal functional need? Does it have the required features? Is it intuitive and can scale?
Social Value: Has there been positive customer reviews or ratings? Has it had a variety of media coverage? What will this say about my company or about me personally?
Emotional Value: How does the brand, product or service experience make me feel? Is it inspiring? Does every interaction or user experience leave a positive impression?
“Customers don’t buy products or services; they “hire” them to do a job. Understanding customers does not drive innovation success, he argues. Understanding customers’ jobs does.”
Christensen also says, “These three dimensions of value are present in each and every decision we make about whether or not to buy or try something new.”
Delivering Memorable Experiences
We all can recall that great meal or that horrible one at a restaurant, whether it was due to the service, the food, or a combination of both. We’ll also associate the experience with a specific day, event, or perhaps even what our significant other was wearing.
The point being is how the functional, social and emotional values of the experience are intertwined. Functional: you were at the restaurant to enjoy a meal. Social: the restaurant did have positive reviews. Emotional: it was either great, bad, or average.
This article, “How to Increase Perceived Value (and Charge More),” speaks to how “we have a huge opportunity to influence how people feel—how they perceive our product’s value.”
As we previously shared here, customer experience is significantly impacting value creation and revenue. These experiences can be everything from a digital experience that isn’t centered around its user or audience, a call center that’s poor on performance, or the sales inquiry that goes unanswered and misses the opportunity to affect customer perceived value and maximize revenue.
“Before obtaining information on the real price of a product, consumers form price expectations according to the visual perception of extrinsic product attributes, such as design aesthetics.”
As we demonstrated here, customer experience is significantly impacting value creation and revenue. These experiences can be everything from a digital experience that isn’t centered around its user or audience, a call center that’s poor on performance, or the sales inquiry that goes unanswered and misses the opportunity to affect customer perceived value and maximize revenue.
Recognizing the Opportunity to Mobilize Price, Quality and Value
This 2021 research study confirmed that “before obtaining information on the real price of a product, consumers form price expectations according to the visual perception of extrinsic product attributes, such as design aesthetics.” This research reveals how “perceived quality indicates the cognitive evaluation of the intrinsic core benefit sought by consumers from a product. A beautiful form can improve consumer awareness of the usefulness and usability of a product.”
By appealing to its customers through product design, packaging, empowerment and customer service, think how Apple, Warby Parker, Tesla, Netflix, Hubspot and Salesforce have recognized opportunity within their sectors by ensuring that they continuously provide functional, social and emotional value to each of their audiences.
Even the financial industry is decommoditizing its approach by embracing digital transformation and implementing the technologies driven by consumer demand.
This whitepaper, “Tomorrow’s Banking: the Digital Transformation of Financial Institutions,” explains that “By breaking data silos and emulating customer experiences outside the industry, banking experiences can be as frictionless and personalized as the customer experiences pioneered by Netflix and Amazon. That’s an important path forward to retain existing customers and gain new ones in an industry undergoing constant change.” The chart below identifies where these initiatives area being prioritized.
A memorable quote given by the late Herb Brooks to his players, prior to playing (and beating) the Russian hockey team in the 1980 Olympics, is that “Great moments are born from great opportunities.”
We feel that this quote is one to remember when you’re looking for opportunities to exploit a positive experience with your brand, product or services that will validate or increase its perceived value and what you charge for it.
Below are several questions to ask when you’re looking to identify ways to increase the perceived value of your product or service:
Through Insights and Data
Does the visual brand perception align with the price point?
How is the messaging conveying authenticity?
Are you generating positive customer reviews?
Through Customer Interactions
Review your website, apps and other digital data capturing customer interactions
Explore messaging that is clear, without jargon and speaks to your audiences’ pain points
Can the look and feel of your collateral or packaging be improved to heighten your organization or product?
How can the call center and digital channels generate additional revenue?
Where can operations and processes be streamlined?
Where can you deploy new technologies that demonstrate convenience, expedite service and provide unforeseen customer service?