Not surprisingly, Value, or the price we pay for a product or service, usually has a big influence on our entire customer satisfaction experience. The other nine domains of customer satisfaction (quality, timeliness, ease of access etc.) are also present in the customer-supplier relationship and have their influence, but ‘Value’ is usually in the top three highest weighted criteria in the mind of the customer. What do we mean by ‘Value’ in the customer supplier relationship? More importantly, what is the customer thinking when he thinks of ‘Value’ in his mind, and how does this ultimately effect his motivation to return to buy again or recommend the supplier to others?

Extensive satisfaction research with hundreds of thousands of data points in many industries shows that Value perceptions have three major distinctions in the mind of the customer. The first is the internal benchmark.

In the mind of the customer there is a price that is the lowest they have ever experienced or heard of someone else paying that forms an internal expectation of the lowest price, as well as the possible price range the supplier should be offering.

The customer’s internal benchmark may or may not be accurate or even a recent reflection of today’s available market prices. When the customer hears of a price for a particular product or service, they automatically perform an ‘internal file search’ in their brain to see if they have any memory of a lower price being charged for that particular product, range or family of products or whatever reference, however distant or removed from their actual experience they have in their brain.

This reference will immediately form itself into a positive or negative reaction to the price being offered by the supplier- in relationship to this internal benchmark. If the price offered by the supplier is lower that the internal frame of reference, the customer will react positively and weight Value highly (on a scale of one to ten in our model) as part of their total customer satisfaction experience.

When Value perception forms an unfavorable reaction from the customer (the price seems higher than the internal reference) the supplier must overcome this negative perception of Value with additional product education with clear features, benefits and other differentiators.

The second major dimension of Value in the customer-supplier relationship is the idea of price increasing disproportionately over time. The price of gasoline is a good example. Gasoline took more than 50 years to reach one dollar a gallon, ten years or so to reach two dollars a gallon and six months to reach three dollars a gallon.

This kind of price increase acceleration completely disregards the aforementioned internal price benchmarks in the customer’s mind. This internal value conflict does not sit well with customers who feel betrayed in the customer supplier relationship and often turn adversarial towards the supplier as their satisfaction rating drops suddenly into the zone of customer dissatisfaction.

The rate and extent of this dissatisfaction gets more dramatic the shorter the time and the higher the increase. Price increases of any kind are potential dissatisfiers for customers who would like the price of products and services they buy to always conform to their internal expectations. Since this is not realistic for today’s competitive business enterprise, suppliers must be extremely careful how price increases are implemented and how these increases will affect customer value perceptions.

«Value perceptions have three major distinctions in the mind of the customer»

The third dimension of Value perception in the mind of the customer is the delayed effect of return and recommend behavior, one that can only be measured over a period of time. This dimension we call: ‘Value after the sale’. Does the product or service still seem to be worth the price after six months? After a year? What about after five years? This evaluation of customer satisfaction will affect return and recommend rates far into the future. Long-term value after the sale correlates with durability and reliability.

For example, Yamaha outboard motors have a world wide following for their reliability and Honda cars enjoy fierce customer loyalty because for their durability over many years. Brands with long term Value customer perceptions will develop stronger reputations that competitors will have to work hard to compete against. Long term Value is also a very popular justification for higher prices and the rational argument “You get what you pay for”.

This is a successful marketing strategy when supported with independent testimonials from actual satisfied customers and of course, a strong word of mouth reputation.

A strong Value perception by customers is one of the ten domains of customer satisfaction to be optimized if a business enterprise wants to break through into the zone of customer satisfaction where preference, loyalty and return and recommend behavior live.

The supplier must examine the dimensions of value closely and how the overall market strategy can be best aligned to maximize customer perceptions of value.