Customer Value Analysis Overview

Customer Value Analysis is a customer-survey methodology that helps customer increase market share. It works best in the business-to-business and consumer-durables markets. In these markets, customers make purchase decisions based on their perceptions of value, which are formed by their perceptions of quality and price. In the aggregate, customers flow from companies that provide inferior value to those that provide superior value.

To develop an effective strategy for increasing customer-perceived value and market share, it is first necessary to know where your company stands relative to its competition. The Value Map reveals your company’s competitive position. Companies in the upper left diagonal provide inferior value because their prices are perceived to be too high relative to the quality of their products and services. Companies that are stuck in this position tend to get acquired or go out of business. Companies in the lower left diagonal provide the highest quality at a particular price point. These companies tend to gain market share.

Value Map

The Value Map reveals competitive position at a high level. To begin to make effective plans to increase market share it is necessary to drill down to examine two things:

• The importance of industry-specific attributes that form customers’ perceptions of overall quality and value, and
• The company’s performance on these key attributes relative to its competition.

The Value Model graphically shows how the key attributes relate to each other, and how important each factor is to the formation of quality and value perceptions. The Attribute Comparison Table reports whether customers rate your company’s performance on these key attributes as better, worse, or statistically about the same as your competitors. This table is not shown here, but is described more fully in our White Paper.

To perform Customer Value Analysis, it is necessary to sample the market, not just your own customers. To obtain valid information on the performance of competitors, the surveys need to be conducted blindly. (In other words, the market research vendor does not identify your company as the survey’s sponsor). To avoid distortion of the sample and the results, we advise companies not to tie the results of these surveys to compensation. Finally, to make improvements that are big enough for customers to feel, we recommend that you align your process metrics with the key attributes.

Learn more about how our consulting services can help your company increase market share using Customer Value Analysis.