Customer Value can be defined as the satisfaction a consumer feels after purchasing a product or service which is measured in terms of what the customer has to give up in order to acquire the said product or service.

The customer value created can be determined using two main criteria: Repeat Sales and Customer Loyalty. If, after the first purchase the consumer is happy with the quality of the product/service, he/she is likely to make a repeat purchase. Companies depend on repeat sales in order to build customer relationships and win customer loyalty.

In order to determine and quantify what is value for the customer, a system of value hierarchy can be used. Customers don’t consider value just in terms of money spent, but the whole experience of obtaining the product and service, which includes the time it takes to deliver, interactions with the sales staff, customer service experience and after sales services.

Importance of Value Creation

Increased globalization means that businesses are faced with a highly competitive environment. Most business offer homogenous products, which means that the only way to stand out from the competition is to create value for customers.

Senior managers tend to focus all their efforts on retaining the existing customers, since it is very expensive for companies to find new leads and generate sales through extensive marketing and promotions. For many companies, the solution to this dilemma means, customer retention through better customer service experience.

Value can be created both in terms of product and service delivery. It is important to understand what your customer values, feedback should be taken to identify what is perceived as value by customers both in terms of products and service. After this is achieved, following are some important measures which can help companies increase value for customers:

Distinguish Your Unique Selling Point

Every business must have a value proposition, which is essentially something different each business has to offer. In order to generate value for customers, it is important to first recognize what the value proposition of the business is. Make sure to brand your business with a focus on your unique selling points and value proposition, so customers can associate you with a quality and value offering brand. Once this has been determined, the business must fully utilize it to generate value for the customers.

Targeting Through Market Segmentation

Customer Segmentation is a process through which companies can divide their customer base into homogenous groups of individuals that are similar to each other in terms and ways relevant to marketing. Customer segments can be created on factors such as age, gender, interests and spending habits.

Segmentation allows companies to target certain groups more effectively by tailoring their products and services to meet the needs of the said segment. A single company cannot possibly meet the needs of all the customers, which is why segmentation is essential for effective service delivery.

Businesses should determine which segments of the market they can serve best, then go on to extensively target these segments. This will not only allow increased sales and revenues for the company, but will enable the business to generate greater value for customers.

Build Long Term Relationships

A lot of businesses focus on increasing sales and revenues instead of building long lasting relationships with customers. Customer relationship management is an important aspect of creating value for customers.

Relationships can be built through effective interaction and engagement with the customers. Moreover, going out of the way to help customers solve their issues goes a long way to build a strong relationship between the company and the customer.


In order to build a strong relationship with customers and encourage repeat sales, it is important to ensure that the quality of goods and service is consistent. If a customer enjoyed his/her first purchase, the repeat purchase will be made with the expectation that the quality will be maintained.

Businesses should set benchmark standards for themselves. This will help them ensure quality of their products or services. Premium brands such as Nordstrom and Zappos have been able to create a name for themselves by consistency delivering on quality of their products as well as their services.

Case in Focus:

In trying to understand the positive impact of creating value for customers, we can see that Yamaha, for their instrument business controlled over 40 percent of the world piano market, however over the years the demand for pianos kept falling. The company found a way out of its troubles through the introduction of digital and optical technology with the ability to distinguish among 92 degrees of strength and speed of key touch. Piano owners could add a player, controlled by a floppy disk, to play different sonatas, for a mere $2500 to their existing pianos, which would essentially increase the value of these pianos manifold. This value-adding strategy helped the company create a potential market of $100 billion.