1. Chapter 10. Exceed Expectations with Value
Build customer loyalty with
A-plus perceptions of value
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Learning objective 1: Define what constitutes A-plus value in the mind of customers
We can build loyalty by giving customers value that exceeds what they anticipate--creating A-plus value
Remember that value = quality of product or service relative to cost. (The higher the cost, the greater value we assume)
Absolute value and perceived value may be different
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3. Absolute versus perceived value
Perception of value = a person’s sense of a product or service’s quality relative to its cost
Products may have same quality while the perceived value is different. Example: “store brand” products and “designer labels” may be exactly the same but have different perceived value
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Learning objective 2: Understand intrinsic and associated value which can affect loyalty
Both play a role in creating customer loyalty
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5. Intrinsic and associated value
Intrinsic = the product itself
Example: durability, functionality, ease-of-use, ability to accomplish what it is intended to do
Associated value = the customer’s experience with the product or company
Is perceptual—in the eyes of the customer
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Learning objective 3: Apply 7 categories of actions to enhance customer perception of value
1. packaging
2. guarantees and warranties
3. goodness of product fit
4. memorable experiences
5. Uniqueness and shared values
6. Credibility
7. Add-ons
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A-plus packaging
“gift wrapping” enhances a products perceived value
Intangible products (e.g., insurance) can be enhanced with packaging or an associated gift
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8. A-plus Guarantees, warranties
Longer term, less restrictive guarantees enhance value
Being generous and open enhances value
Trust-building with customers
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9. Goodness of product fit
One size fits one.
Personalized products, services enhance value
Creates “industrial intimacy” as companies better understand specific needs and personal wants of customers
Requires some form of customer relations management (CRM) to gather feedback
Get customers the right product/service for them
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10. Memorable experiences
People remember what they feel—their emotional responses
Experiences (music, parties, activities) can create emotional experience
Caution: core product (intrinsic value) must be sound. Experiences enhance the associated value.
Example: a restaurant with bad food cannot make up for it with a fun atmosphere
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11. Uniqueness and shared values
Organizations that support customer social or political interests demonstrate stronger associated value
Example: companies that stress environment consciousness or that support valued causes such as cancer awareness, etc.
Shared value can overcome price advantages
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Credibility
The degree to which the customer trusts the company or organization
Trust created with open policies, simple-to- understand pricing, follow-up on commitments, openness to feedback, etc.
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Add-ons
Giving something unexpected (or sometimes selling something the customer will need) that adds value
Additional service not normally assumed (e.g., the extra touch at a car wash or auto lube center)
Central to this philosophy is the belief that you cannot give away more than you eventually receive. What goes around comes around.
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A final thought
You can tip the scale in favor of customer loyalty by providing value that exceeds customer expectations. The perception of associated value is key—not necessarily just the intrinsic quality
Little things mean a lot!
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