Customer Value and Perception
Have you ever wondered why customers choose to fly on a Cathay Pacific Flight from Europe to Asia instead of on a low-budget Eva Air Flight?
The Cathay flight can come in at a couple of hundred dollars more for the same itinerary, although:
- Both flights can get you from “A” to “B” in the same amount of time
- Both aircraft are of the highest safety standard, getting you to your destination in one piece
- Both carriers have mileage programs (perks), earning you mileage accrual and membership status
So, apart from perhaps the fancier bottle of wine or the more appetizing dish (which just does not justify the difference in pricing), what are the explanations for being willing to spend so much more for a premium airline ticket…?
Here’s another example:
Why purchase an apple laptop if you can purchase a dell at almost half the price?
Why choose to dine in a fine dining or Michelin Starred restaurant and spend up to $ 500 a person if you can today have a pleasant meal in a bistro or brasserie style restaurant at 1/10th of the price?
The answer to such questions lies in the fact that customer perceive value based on very personal needs.
In the examples mentioned above:
- Cathay Pacific justifies its premium pricing due to their long established reputation
- Apple looks to add value by selling lifestyle (design and user-experience) rather than selling corporate functionality (a mere performance and functionality aspect)
- The Michelin starred restaurant sells product and service excellence that is geared at creating a genuine experience in a unique setting
This is why we need to consider on how we can create value for our customers and strategically align our systems and processes in a way to ensure that these contribute to capturing the attention of our patrons.
Some value influencers include:
- (e)-Reputation (TripAdvisor, La Liste)
- Desired Status (VIP; prestige)
- Perks (additional benefits)
- Company policy (think about the impact sub-prime crisis of 2008/2009 had on the high-end luxury hospitality segment when financial institutions, after having been bailed out by the tax payers, no longer authorized 5-star hotels for corporate travel)
When Googling “Value”, you obtain the following:
“Value is the regard that something is held to deserve; The importance, worth, or usefulness of something”.
Synonyms include: …advantage, desirability, benefit, gain, profit, service, helpfulness, assistance, effectiveness, efficacy, etc. (Source: Google)
It should always be about the customer
People don’t buy attributes, they buy benefits and values
As value is defined by the customer based on personal preferences and circumstances, it is because your product responds to the customers’ needs and desires that it will be purchased or consumed.
It will always be the customer who defines what in his/her opinion is or will be perceived as value! Listen to your customer and understanding what motivates their purchasing decision allows us to explore new opportunities in creating new value propositions.