Customer Perceived Value: Understanding What Appeals to ...

Customer perceived value defined ... When making a purchase, a customer values a product's benefit higher than its function. For example, a ... CustomerPerceivedValue:UnderstandingWhatAppealstotheConsumer Product Features Apps Integrations Solutions CallCenter PhoneSystem Sales Support Ecommerce Remote Non-profits IT AppMarketplace Pricing Partners IntegrationPartners ChannelPartners PartnerStories Resources Blog CustomerStories Events Guides KnowledgeBase HelpCenter OnboardingPortal VoIPDocumentation VoIPProvider Login Tryforfree MENU Product Features Apps Integrations Solutions CallCenter PhoneSystem Sales Support Ecommerce Remote Non-profits IT AppMarketplace Pricing Partners IntegrationPartners ChannelPartners PartnerStories Resources Blog CustomerStories Events Guides KnowledgeBase HelpCenter OnboardingPortal VoIPDocumentation VoIPProvider Login Tryforfree orcontactus| CustomerHappiness CustomerPerceivedValue:UnderstandingWhatAppealstotheConsumer Backtoblog byGinaWinsky 6April2017 ViewCustomerStories Share: Consumersdon’tpurchaseproductsprimarilyfortheirfunctions.Infact,functionissimplyameanstodeliverwhatacustomerreallywants:benefit.Acustomerbuysaproductfortheperceivedbenefithewillgainfromit.Thisperceivedbenefit,inadditiontohisopinionoftheproduct,arewhatcreatecustomerperceivedvalue. Customerperceivedvaluedefined Whenmakingapurchase,acustomervaluesaproduct’sbenefithigherthanitsfunction.Forexample,acustomerdoesn’tbuyadrilltohaveadrill.Hebuysadrilltohavethecapacitytomakeholes.FrommostSaaScompanies,peopledonotmerelybuysoftware,butrathersolutions.Howcustomersweighagivensolutionmaynotdependentirelyonhowwellthesolutionfitstheirneeds.Infact,therearemanyfactorsatplayindetermininghowacustomerperceivesaproduct’svalue. Customerperceivedvalueoftenhaslittletodowithactualprice.Instead,itdealswithabstractcosts.Customerperceivedvaluecanbedeterminedbytherelationshipbetweenperceivedbenefitsandperceivedcosts: Termsexplained Perceivedproductbenefitsexistonthreelevels:physical,logical,emotional.Forexample,buyinganewsuitwillhelpyoustaywarm(physical),landthenewjobforwhichyouareinterviewing(logical),andsaveyoufromtheembarrassmentofwalkingaroundnaked(emotional).Perceivedcostsincludemoney,time,andlabor. Whencomparingthedifferencebetweenperceivedbenefitandperceivedcost,ifthedifferenceispositive,customerperceivedvalueishigh,meaningcustomerswillbuyaproductorservice.Therearemanytechniquescompaniescanusetoimprovecustomers’perceivedvalueoftheirproduct. Customerperceivedvalueapproach:pricing Whilecustomerperceivedvalueisfiguredusingperceivedcosts,thesecostsdon’tnecessarilymeanmoney.Priceisnotthemostimportantthingindeterminingacustomer’sperceivedvalue.However,itdoesplayarole.Therearewaystoincreaseacustomer’sperceivedvaluewhentacklingaproduct’sprice.Accordingtomarketingwriters,NeilPatelandRitikaPuri,“Youneedtochoosenumbersthatwillcompelyouraudiencestobuy.”Theyproposethefollowingtechniquestodojustthat: Readytobuildbetterconversations?Simpletosetup.Easytouse.Powerfulintegrations. Tryforfree 10for$10 Whenaconsumerseesadealadvertisedas“10for$10,”heoftenassumesthathemustpurchasetenofthegivenproductinordertoobtainthedealprice.However,thisisoftennotthecase.Usually,theconsumercanbuyoneitemattheadvertisedpriceof$1.Marketersusethisstrategytoinfluencebuyerstoloaduponproducts. Thepowerof‘9’ Alsoknownasthe“left-digiteffect”or“charmprices,”the“Powerof9”pricingstrategyplaysontheconceptthatwhenaconsumerreadsanumberfromlefttoright,thelastnumberheseesistheonestuckinhismind.Forwhateverreason,thehumanbrainperceivesthenumberninetobeassociatedwithdealsanddiscounts.Onestudyshowedthatusingthismethodincreasedsalesby24%. AnotherstudyconductedbyMITandtheUniversityofChicagofoundthatwomen’sdressesweremorelikelytosellwhenpricesat$39thanthelowerpriceof$34. Removingsignsofmonetaryvalue Accordingto2009CornellUniversityresearch,consumersarelesslikelytomakepurchaseswhenmenuoptionsincludemonetarysymbols,suchas$or€,ormonetaryvaluewords,likedollarsorpounds.Simplybeingthere,asanadditionalwordorsymbol,foraconsumer’sbraintoprocesschangeshis/herperception.Awaytocombatthisistolistapricewithsimplyanumber.Clearly,thisiseasiersaidthandonewhenconsideringanSaaScompanywhoconductsbusinessinmanycountriesandcurrenciesaroundtheworld.Insuchacase,anSaaSmightconsiderapulldownmenuatthetopoftheirsite,whereconsumerscanchoosetheirdesiredcurrency,andsubsequentlydisplayingthepriceswithnumbersalone. Changetheunitofmeasurement Anotherwaytochangeacustomer’sperceivedvalueofaproductthroughpricingisbychangingtheunitofmeasurementfrommoneytootherthingsthatthesameamountofmoneycouldbuy.AccordingtoDaveSchneider,“peopledon’tderivedirectvaluefrommoney,theyderiveitfromthethingsthatmoneybuys.”Davecitesarelevantexample.FacebookpurchasedWhat’sAppbackin2014foradizzying$19billion.However,thenumberhadnorealvalueorrelevanceuntilnewsoutletsstartedillustratingwhatelseFacebookcouldhavebought.Thisincludedcleanwaterfortheentireplanetpricedatamere(incomparison)$10million.Whenwesawwhatelsethatmoneycouldhavebought,wefeltasthoughhehadabetterconceptualunderstandingofhowmuchmoney$19billionreallyis. Customerperceivedvalueapproach:Credibility Whenacustomerattachesahighlevelofperceivedcredibilitytoaproductorcompany,heismorelikelytobuythatproductordobusinesswiththatcompany.Consumersarewillingtopaymoreforbrandswithareputationforquality.Withcredibilitycomeshigherlevelsoftrustandsatisfaction.Somegreatwaystoimproveyourcompany’sperceivedcredibilityscorearethroughtrials,testimonials,andpartnerships. Trials WhenanSaaScompanyoffersitsclientsafreetrial,theyaresaying,“Pleasetryourproduct.Wewantyoutoknowthatwestandwhatwesell.”Thisisavaluablewaytoshowcustomersthatacompanystandsbehinditsproduct.Additionally,accordingtoKissmetrics,customersareoftenapprehensivetogivetheircreditcardnumbertopurchaseasoftwareorproductthattheyhaveneverused.Givingcustomersachancetotrytheproductforfreedecreasesthisapprehensionandeliminatescustomerperceivedrisk. Testimonials Publishingcustomertestimonialsonyourwebsiteincreasescustomerperceivedcredibilityasitincreasestrust.Ifothercustomershaveusedaserviceorproductandwerehappywiththeresults,thenthecompanyissuccessfulindoingitsjob.Throughreadingpositivetestimonialsfrompreviouscustomers,apotentialcustomercantrustthatifhealsopurchasestheserviceorproduct,hetoowillbesatisfiedwiththeresults. Testimonialsaregainingforcewhenapproachingincreasingcustomerperceivedcredibility,astraditionaladvertisingmethodsfailtoengageGenerationYconsumers,whoaresteadilyreplacingbabyboomersinboththeworkforceandtheeconomicmarket.Sinceadsareincreasinglyperceivedasuntrustworthy,testimonialsareamorepalatablewaytogetyourbrandouttheretoprospectivecustomers,whoseeadvocacyasmoregenuineandweightythanads. Partnerships Partneringwithothercompaniescanincreaseacustomer’slevelofperceivedcredibility.Youshouldconsiderafewthingswhenchoosingwithwhichcompaniesyou’dliketopartner.Bychoosingthewrongcompanies,partneringcouldbecomedetrimental. Makesureyourpotentialpartnercompanyhasasolidreputation. Pickcompaniesthatattractclientssimilartoyours. Choosetopartnerwithcompanieswhosharesimilarvalues. CustomerperceivedValueApproach:TheValueofTime Itisproventhatthehumanconnectionwithtimeisverystrong.Perceivedvalueoftimeishigherthanperceivedvalueofmoney.Marketersshouldtakenoteofthisontwolevels:(1)timesells,and(2)consumerswantpurchasingtobeconvenientandfreeoftimerestraints. Timeismorevaluablethanmoney Thehumanrelationshipwithtimeismuchmorepersonalthanthehumanrelationshipwithmoney.Becauseconsumersdon’tlooktobuyaproductbutratherthebenefitthattheproductbringsthem,theyaremorelikelytointernallylinkthatbenefitwiththeamountoftimespentenjoyingaproduct.Advertisersknowthisandframewordingtoincorporatethebenefitoftimeenjoyedwhenusingaparticularproduct. “Becauseaperson’sexperiencewithaproducttendstofosterfeelingsofpersonalconnectionwithit,referringtotimetypicallyleadstomorefavorableattitudes—andtomorepurchases,”saysJenniferAaker,theGeneralAtlanticProfessorofMarketingatStanfordGraduateSchoolofBusiness. Convenience Consumersaremorelikelytomakeapurchaseiftheyfindthataproduct/companymakestheuseoftheirtimemoreefficient.ThisisespeciallytrueforSaaScompanies.Thelatter offersoftwareforthatsolepurpose,toexpeditebusinessprocedures,byofferingfeaturesthatwillfacilitatetheuser’swork. SaaScompaniesshouldconsiderofferingintersitefeatures,suchasa“click-to-call”button.Suchfeaturesmakecompletingpurchases,answeringquestions,andofferingsupporteasy,and,ultimately,expediteanyassistanceacustomermayneed. CustomerperceivedValueApproach:EmotionConnection Oneofthemosteffectivewaystoincreaseacustomer’sperceivedvalueistoappealtohisemotionsorvalues.Inordertodoso,it’simportanttoknowwhattypesofthingsyourcustomermightappreciate. Consciouscapitalism Consciouscapitalismisastyleofconductingbusinesswhilealsohelpingthoselessfortunate.TheideaofconsciouscapitalismcomesfromabookwrittenbyJohnMackey.“A certainamountofcorporatephilanthropyissimplygoodbusiness,”saysMackey.Researchseemstocorroboratethetheorythatperceivedvalueisincreasedwhencompaniesaltruisticallyhelpacause.“94%ofconsumersreportthattheywouldswitchtoabrandthatsupportsacause.20%wouldbuyamoreexpensiveproductifitsupportedacause.” Senseofcommunitywithinthetechstartupworld Fortechstartups,it’simportanttorespectandpromoteothertechstartups.It’sasifthereisahuge,extendedfamilyofwhichweareallapart.Whenconsideringwithwhomtoconductbusiness,aconsumerwhoisapartofonetechstartupislikelytochoosetodobusinesswithanothertechstartup.Becausecustomerswithinthetechworldunderstandthedifficultiesthatgohand-in-handwithstartingatechcompany,theirperceivedvalueofothertechstartupsisincreased. Locality Localityisahugepartofcustomerperceivedcredibilityaspeoplewanttosupporttheirowncommunities.Termslike“locallymade”aremorecommonnowthantheyhavebeenin100years.Notonlyarelocallyconductedbusinessesbetterfortheenvironment,they’realsobetterforlocaleconomiesandlocalcommunities.Doingbusinesswithalocalcompanyisasmallwaythataconsumercanfeelasthoughheissupportinghiscommunity. Usingalocalnumberincreasesperceivedcredibility.Forexample,whenreceivingacoldcall,peoplearemorelikely topickupanunknownnumberifithasalocalareacode.Thesimpletouchofcallingfromalocalnumberincreasesperceivedtrust. Share: Readytobuildbetterconversations?Simpletosetup.Easytouse.Powerfulintegrations. 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