Improving Customer Value Can Benefit Business Profitability

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Customer Value

Customer value is defined as the sum of the total benefits promised by a vendor to the customer that he/she will continue to receive in return for the customers continued purchase of goods and services from the vendor. According to Robert Kaplan, customer value prioritizes and identifies the set of characteristics by the vendor aimed at attracting the customers. He cites such characteristics such as offering discounts on purchased goods, after sales services, good customer care and many more as some of the characteristics of a vendor aimed at increasing the customer value. In this regard, Kaplan summarizes customer value as the difference between what the customer has to give to get a certain product and what the customer gets from the product itself.

Additionally, Kaplan notes that customer value plays a strategic role in evaluating different vendors and their services to the customers (2004). For example, customer value helps to evaluate the relative performances of vendors by comparing what a certain customer gets from a given vendor as compared to another vendor or competitor. It also helps to compare the price disparities between one competitor to the other since the price is the payment made by the customer to acquire the required service or product plus the costs of accessing. According to Michael Lanning, the sales and marketing efforts by the vendor and the processes of customer service and delivery by the vendor are important steps towards increasing customer value. In this regard, customer value proposition assists in the development of the marketing strategy in the firm as well as offering guidance to the firm on the particular market which should be targeted (1998).

Lanning notes that customer value helps to make key decisions about who? What? and why? a certain marketing strategy should be used in a particular market segment. Therefore, customer value helps to frame the structure of marketing...
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