Creating Value for the Customer: A powerful Revenue Booster!

Creating Value for the Customer!


The market is ever-changing and dynamic as never before.


Every organization is struggling to compete in this competitive marketing environment.

Attracting Customers and Retaining them is a major challenge that most organizations are faced with. At the core of this is How do we create value for customers”.

If the customer perceives that they are receiving value, they will stand in a queue to buy the product. Customers queue overnight before the launch of the Apple iPhone, to be able to be the first one, to buy the phone. Customers are queuing up and have booked for Tesla’s car months in advance. 


Iphone Store
Customers lined up in front of the newly opened Apple Store in Marunouchi, Tokyo, Japan.


In most cases, there is a huge gap between the perceived value of the product or services and the actual worth of the product.


So how do you define value?


Can you measure it? What is the perceived worth of the products and services to the customer? Remarkably few are able to answer these questions. And yet the ability to pinpoint the value of a product or service for one’s customer has never been more important.

Every consumer has a unique set of needs & expectations, so no two consumers will place the same customer value on the same product or service.


Customer Value is the perception of what a product or service is worth to a Customer versus the possible alternatives. Worth means whether the Customer feels s/he or he got benefits and services over what s/he paid.


In a simplistic equation form, Customer Value is Benefits-Cost (CV=B-C)


Customer Success

Source: Raf cammarano


In every buying decision, a consumer asks the question: ‘What am I going to receive against what I am going to pay?’ The gain the consumer receives for the benefit is weighed against the cost the consumer must pay to acquire the benefit. The value the individual consumer places on a product or service becomes the customer value for that offering.


To create real value, you must recognize what a Customer perceives as value. What is important to the Customer in his buying decision? Is it Price or Benefits? Perceived value is the benefit that a customer believes he or she perceived to have received from a product/service.

Value in business is the worth in commercial terms in exchange for the price it pays. The essence of customer value management is to deliver superior value (customer) and get an equitable return for it. (company)


An organization in order to create customer value has to be efficient enough to balance the expectations of the customer and at the same time make a decent profit.

Customer Value


Figure 1: Customer value (Source: Plaster G and Alderman J D, 2006, pp 100)


Most of the time Organisations have taken upon themselves the need to create value for their customers. They try to understand the customer’s needs, work closely with them, empathize with them and then come up with Products & Solutions to meet the customer’s needs.


Many organizations have also been able to identify unspoken, unmet demands of customer needs and proactively tried to address them – Apple iPhone is a classic example. Even before the customer expressed his need, Apple introduced Graphic User Interface, Touchscreen, Siri (Voice Commands), etc.


In their book The Future of CompetitionCo-Creating Unique Value with Customers, CK Prahalad and Venkat Ramaswamy have challenged this mindset and have said that the “Supplier may not always have all the answers.


Rather than shooting in the dark in pursuit of trying to understand what the customer needs are, they have suggested that it is time that Organisations work closely with customers and jointly co-create Products & Solutions and creating value for both the customer and the organization. “Customers now seek to exercise their influence on business” they argue.


Co-Creating Value – New frame of reference for Value Creation


Co-Creating Value - New frame of reference for Value Creation

Source : Co Creating unique value with Customers – CK Prahalad & Venkat Ramaswamy


Watch A video: Co-creation by C.K. Prahalad


Creating Customer Value increases customer satisfaction and the customer experience. (The reverse is also true. A good customer experience will create value for a Customer). Creating Customer Value (better benefits versus price) increases loyalty, market share, price, reduces errors and increases efficiency, and gives them a competitive advantage in the competitive marketplace. Higher market share and better efficiency lead to higher profits.

Remember that “Wealth is created from creating valueRandy Rage.



About Author:

Mr. Ramesh Ranjan, Advisor – Farsight Technologies | Founder & Editor – Human Engineers

Mr. Ramesh has served the H.R. and Businesses for 35 Years. He is a former V.P. of H.R. in Schneider electric and has worked in Indian & Multi-National Companies in various capacities, including leadership roles for the last 20 years

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