Customer Perceived Value (CPV) - Its Importance in CX

by Mauricio Dulón - CX

I rely on my phone for business purposes, so it's essential that it's user-friendly and supported by a comprehensive ecosystem. For me, investing in an iPhone 15 is a strategic business choice. I'm willing to spend $1,000 on it because I view it as offering good value for my needs. However, other customers may not share this perception, and for them, $1,000 might seem excessively high. It's vital for companies to focus on Customer Perceived Value (CPV) and to undertake Customer Experience CX initiatives that enhance this perceived value.

Customer Perceived Value is a subjective assessment made by customers about a product or service's benefits versus its cost.

This assessment is not just about the financial cost but also includes time, effort, and emotional investment. A high CPV suggests that customers believe they are getting more value than they are giving up (cost, time, effort).

CPV is a critical determinant in a customer's decision-making process, it influences the purchasing decision. A product with a high perceived value is more likely to be chosen over competitors. For example, Apple (my favorite) has mastered the art of creating high CPV through innovative technology, sleek design, and a strong brand image, leading to a loyal customer base willing to pay premium prices that they might not otherwise pay for other brands.

CPV is key when trying to foster customer loyalty. Customers who perceive high value in a product or service are more likely to become repeat customers. For instance, Amazon’s Prime service is a good example, offering customers value through fast shipping, a vast selection of products, and streaming services, which encourages continued subscriptions. There are 200 million Amazon Prime members that are loyal to the brand and that translates to recurring revenue that Amazon can capitalize on.

The perceived value contributes significantly to the brand's overall image. A high CPV can elevate a brand's status in the market. For instance, Tesla’s commitment to innovation and sustainability has positioned it as a valuable and prestigious brand in the electric vehicle market.? You can perhaps find other EVs for a lower price, but a Tesla is a Tesla anywhere in the world.

Satisfied customers are more likely to recommend a product or service to others. This organic marketing is invaluable and largely driven by high CPV. Starbucks, through its consistent quality, unique flavors, and ambient stores, has successfully created a high CPV, often leading to positive word-of-mouth.? There are so many options when it comes to having a cup of coffee, but the CPV that Starbucks provides makes it one of the most powerful brands in that industry.

What can you do to enhance the CPV in your organization?

Continuous improvement and innovation in products or services can significantly boost CPV.? A strong brand identity can elevate CPV also. Luxury brands like Rolex have leveraged their heritage and quality to create a perception of high value. Providing excellent customer service can enhance CPV as well, as seen in the hospitality industry, where brands like The Ritz-Carlton are synonymous with high-quality service. Finally, tailoring products or services to individual needs can increase CPV. Netflix’s personalized recommendations based on viewing history is a classic example.

Understanding and enhancing CPV is pivotal for businesses aiming to improve customer experience and be competitive. By focusing on quality, innovation, strong branding, exceptional service, and personalization, companies can significantly increase the perceived value of their offerings, leading to greater customer experience.