Perceived Value = Dis/Satisfaction

In my marketing life, I had gained tremendous amounts of knowledge in many aspects of marketing. But of all the things I have learned, the most valuable knowledge came from my direct interaction with clients/customers. Providing great value is the hallmark of customer retention and expansion.

Perceived Value Leads To Customer Satisfaction, or Dissatisfaction. It’s up to you

At the end of the day, every business exists for one reason: in the words of Peter Drucker, “The Purpose of a Business is to Create a Customer.” For without them, businesses can’t survive.

That sounds simple enough. But what makes a customer? What makes a business’s offerings worthy of customers willing to pay? The answer lies in value. Whether you’re a goods- or service-based business makes no difference. Your end goal is to provide something of value – more valuable to the consumer than the money they pay for your offerings.

Again, this sounds simple. But it becomes complex, especially with service-based businesses.

An Example, Based on My Past Experience

Let’s say John Johnson signs up for basic services provided by Acme Corp. The customer notices a great deal of new business shortly after signing up for the services, and he is happy. The value provided by Acme has exceeded the value of the money John was willing to pay.

Months later, John decides to add a few more complementary services. Shortly after, he notices some increase in business, but not as much as before. Compared to the amount he has spent, John is still happy.

A year later, John decides to splurge – with all the additional business he’s generated, he’s now at a financial place to be able to invest more heavily in his marketing and business development. So he buys a large package from Acme. Several months later, however, he doesn’t see a huge increase in sales. In fact, he’s not seeing much more happen than with his previous package of services.

It’s at this point he questions the value of his spend. Even though he’s doing much more business than he ever would have by himself, he doesn’t feel the return is great enough to justify the cost. Which is weird, because many of his friends and competitors are using similar solutions from Acme and seeing great results. This leaves John, a once-happy customer, with a bad taste in his mouth.

Value is Relative

What one business owner finds valuable, a close competitor may not. In my experience working in service-based organizations, defining clear expectations and truly understanding what the customer finds valuable is paramount in  maintaining a positive long-term relationship.

Value is Comprehensive

It may be counterintuitive, but the more products or services a customer purchases from you, the harder it is to justify value. To the average person, value is often seen as a linear equation, where x + y = z. Anybody who’s been involved with a service organization knows that to be blindingly inaccurate. Though it may be a poor example, think about a home-cooked meal.

Adding salt and pepper to a nice medium-rare rib-eye makes it taste better than no seasoning. This is the basic service. Here, x + y = z. But then you add sauteed mushrooms. Then you add garlic and rosemary mashed potatoes. Then grilled asparagus. To top it off, you pour a nice zinfandel. Together, the meal is great. But think about the individual elements – do each of them represent the same incremental amount of increased pleasure? Not necessarily. But put them all together and the package works nicely.

Putting this into business terms, the salt and pepper represent the basic services Acme provides. The other elements can represent additional service offerings, but also the intangible and hard-to-quantify aspects of business: customer service, timeliness, open communication, access to information, etc. Each of those alone isn’t enough to maintain meaningful relationships, when people’s hard-earned money is at stake.


No matter the size of business, or industry, or competencies, the value transaction must always reflect and compliment the expectations set between the customer and the supplier. When these expectations become fluid, value equals dissatisfaction.

To maintain happy clients, mind the expectations. And provide value, no matter how relative it may be.

Do you have any thoughts/comments? I’d love to hear in the comments section.

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