The Simple Concept of Customer Value

Customer Surveys are vital for helping organizations determine the different types of customers who make up their customer base or customer categories. This information is very important so that the business will improve and expand.

Customer Surveys help improve customer retention rates significantly. Customers are retained by an organization if the customers are satisfied. Data from Bain & Co. consultant Fred Reichheld noted that when customer retention rates improve by at least 5%, this produces a corresponding gain in profits ranging from 25% to 95% – though this may depend on what kind of business is being pursued.

Customer Surveys help customers show what they perceive is wrong with the organization so that the small problems do not escalate into much bigger problems later on. It might be said that Customer Surveys help organizations maintain the close ties with their customers that help guarantee long-term customer contact and patronage. And every business needs the patronage of clients to survive for the long-term.

It is important to know when Customer Surveys are appropriate to have customers fill out and when the organization should hunker down and wait. A weekly survey might make you feel productive to analyze but in reality there really is not much difference between customer behavior in one week and customer behavior the next week. Even supermarkets know this, which is why they launch promos in seasonal format rather than keep changing promos from one week to the next. If you issue Customer Surveys on a weekly basis, that will just cost you money and will not reveal any significant data that will be useful for identifying customer behavior trends that you can use.

It is important to remember that businesses aim to create value  and Customer Value is just one type of value created throughout the business operations. To find out what kind of value you produce, you need to figure out what type of needs are satisfied now by your organization. Then you need to ask what future needs could possible be satisfied by the organization. These two steps help you identify how value is formed in the organization and for whom.

Connected to the concept of Customer Value is the concept of empowerment. This means that if you provide Customer Value to customers, they become empowered clients of your organization. Customer Value alone is composed of different types of value-power arrangements that fall in the realm of the emotional, the informational, and the economic (among others.) Such values can be said to be hidden values but also exact a price or cost on the organization which may be more easily seen than the value. For instance, if you ask Customer Service Reps to do more work, that empowers the customer but you need to pay your Customer Service Reps appropriately for them to impart that value to your customers. It is a process of change.

Providing Customer Value can be described adequately by this quote from Henry Ford: The man who will use his skill and constructive imagination to see how much he can give for a dollar, instead of how little he can give for a dollar, is bound to succeed.

In a word, what Ford meant was that optimal customer service can point us to the road to success. Being stingy with customer service will direct us to failure. It is that simple.