How to calculate CPV
Customer perceived benefit – customer perceived cost = customer perceived value
How Potential Value is determined
When customers are partaking in the purchase decision making process, there are multiple factors they will take into consideration. These aren’t just technical features or specifications…
- Physical – This means how the customer perceives the actual physical qualities of your product, such as design, texture, size and color. Is it the right size? Too big or too small? Is it heavy or light? Do they like the way it looks?
- Logical – This means how much personal value the customer believes they could gain from your product. Customers will ask themselves questions like ‘how will this help improve my life?’ and ‘will it save me time or solve a problem I have?’ .
- Emotional – These are the intangible benefits the customer feels they could gain from buying your product. This is how it will make them feel if they bought the product. For example, will stress levels go down and will their happiness increase? Are Gen Zs buying the latest Nike sneakers because they are in style or because of peer pressure? Is there a difference? Ultimately, they are thinking about “how will I feel emotionally if I don’t buy this product”.
1. The different types of Customer Perceived Value
Customer perceived value consists of several practical and emotional aspects which make up the full decision:
- Pricing – Each customer will have their own idea about how much a product is worth, and how much they are willing to pay for it.
- Tactical pricing – Customers like to feel they have got value for money. This type of value is added by the amount of time or money the customer can save by using the product – knowing there is potential to get three months ‘free’ could be the nudge they need.
- 5 for $5 – When customers see a deal such as this, it often doesn’t click in their head they could buy one of the products on its own. They perceive they are getting better value for each product if they buy multiple ones as part of a deal.
- Power of 9 – There is a theory in marketing that when customers read numbers from left to right, the last one they see is the one that sticks in their mind. The brain also associates the number nine with deals and discounts, so a product is more likely to be bought if prices at $9.99 rather than $10, for example.
- Removing monetary value – Research has shown that customers are less likely to make a purchase when menu options include monetary symbols, for example dollar or pound signs. Therefore, removing these can help increase sales.
- Changing units of measurement – Customers often perceive the value of a product in comparison to other things that the same amount of money can buy. This helps customers conceptualize how much money that actually is
Customers are much more likely to buy from brands which are known for their level of high quality, as they will attach more value to the products they sell. So, how do you increase the credibility of your brand in the eyes of your target audience?
- Trials – It’s a way to show your target audience that you believe in your product and minimize risk.
- Testimonials – In the modern era, consumers are suspicious of advertisements, so real-life testimonials are a great way to get the message across about your product and gain consumer trust
- Partnerships – Partnering with another company that has great credibility is an ideal way to boost your brand. However, make sure you have a similar target audience and reputation!
3. Emotional Connection
To increase CPV, means to appeal to consumer’s own personal values: what is important to them and their lives? Find out what your target market is interested in:
- Conscious branding – Studies have shown that people are more likely to buy from a brand that they believe shares their values. In fact, it has also been shown that consumers are willing to pay a higher price for a similar product if it’s to support a good cause.
- Locality – Customers want to support their own communities. Buying from a local company which sources its materials or ingredients from the surrounding area is not only good for the planet, but good for perceived value. This is a small way in which a customer can feel they are having a positive impact on their community.
4. The Value of Time
In today’s world, we perceive the value of time more than the value of money. When it comes to marketing, we need to consider that customers want their buying journey to be free of time restraints. This means selling convenience. Customers are much more likely to complete a purchase if they believe the product will make their time more efficient. The buying experience also needs to be smooth and efficient, with a simple checkout process that allows each customer to fill their details in quickly and easily.
How can we measure customer perceptions?
In short, there are a few ways this can be done. For example, through Audience Collective’s digital ethnography platform (360), or our brand tracking product Flexi-Track. Here’s a number of ways we can help
- Collect customer feedback: custom surveys, questionnaires
- Look at psychographic data
- Follow up with customers
- Customer sentiment analysis
- Brand tracking
Get in touch with us today to find out more about any of these services.
The importance of Customer Perceived Value
Analyzing and measuring customer perceived value should be a vital part of your overall marketing strategy. After all, marketing professionals can use it to predict or improve how consumers view a product. As this increases, so do sales and profits!
We have a fantastic balance of research specialisms and expertise, having worked in all sorts of industries from finance to retail and health and wellbeing. Get in touch today to chat to one of our team to find out how we can help.