Customer value vs Customer satisfaction - What are the differences?

Categories: Email marketing
Sam Thomas avatar
Sam Thomas Updated: April 26, 2023


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There are some variations between customer value and customer satisfaction, despite their similarities at first glance. The primary concept of customer delight is the basis for both customer value and customer happiness. Consumer experience, customer impression, and purchase behavior can all be measured using both methods. As you can see, there are noticeable variances between the two products.

However, on the surface, they’re nearly impossible to notice. Both of these concepts are critical to the success of any organization, and they must be prioritized by all. Customer loyalty, customer retention, a high customer lifetime value, market leadership, and goodwill are all a result of excellent customer value and customer satisfaction efforts. A person’s perception of both notions is subjective, as they might vary from person to person.

In this article, we will explain the two terms in great detail, and point out the differences between them.

What is customer value?

Customer Value

A product’s customer value is present when the product’s benefits outweigh the costs associated with purchasing the product. To put it another way, there’s a trade-off between what you’re getting and what you’re paying. By subtracting overall customer costs from total benefits, the worth of a customer can be calculated.

Customer value = Total Customer Benefits – Total Customer Costs

Benefits to customers can include the quality of the product and its guarantee, after-sales support, repair costs, free delivery of the product, the relationship between the client and the staff, and more. Time and effort, as well as risk, are all factors that make up a project’s ultimate cost. Product standards, price, brand name, product alternatives, customer experiences, and connections all contribute to customer value.

If a child has just one unit of currency, she can buy a bar of chocolate. As a result, she considers the various possibilities in the market. Every person has his or her own preferences when it comes to the brands he or she uses, and those preferences change from time to time. As a result, the kid also has a perception (Perceived value) of the value of different brands of chocolate in a single unit of currency that she has previously used. In addition, she prefers Chocolate A to Chocolate B, so she asks her dad to get her Chocolate A.

You can see that she chose chocolate A because she thought it was more valuable. Because as a customer, we always compare the worth and benefits of items to their price. Customers weigh the perceived value of a product against the perceived worth of similar alternatives on the market before making a purchasing choice. They will choose the product or service that offers the greatest perceived value for their money. As a result, a company must outperform its competition in every area in order to succeed in the market. It is critical for a business to have a high customer value since it results in happy customers, increased market share, contented staff, a competitive edge, and a better public image.

What is customer satisfaction?

Customer Satisfaction

As a measure of customer satisfaction, the product’s performance is compared to the customer’s expectations. Consumers’ expectations for and perceptions of product performance are highly subjective. Individuals experience, not think, contentment. As a result, it is very subjective and difficult to pin down.

Among the many factors that influence customer expectations are previous purchases, referrals from family and friends, seller assurances, and knowledge about the competition. An evaluation from the customer’s point of view is impossible without actually using the product or service. As a result, customer satisfaction is a post-sale experience. Reactionary in nature, then.

Pre-purchase expectations and post-purchase experiences may only be compared to determine customer satisfaction. Satisfaction is achieved when the product’s features and benefits match the price paid for them. If not, then it’s a case of discontent. As a result, once a customer has used an offering, the value they receive as a customer changes in their level of happiness. Customers’ expectations, however, can’t always be counted as value. Customers may have higher expectations than can be met at times.

What’s the difference between customer value and customer satisfaction?

We can see that customer value and customer satisfaction are intertwined from the previous analysis. The customer must be satisfied in order to get good customer value, and the consumer must be satisfied to get good customer value. Customer value and customer satisfaction are intertwined, and this knowledge is critical to corporate success. These two ideas can be separated into the following aspects.


Customer value is the customer’s opinion of the product’s value in comparison to its cost.

However, customer satisfaction is based on how happy clients are with the product’s performance as compared to their expectations.

Comparison of the Competitors

An offering’s customer value is a relative concept, in which the customer compares the product’s benefits and prices to those of its competitors. It’s a mental process from the customer’s point of view while deciding the value.

On the other hand, emotional satisfaction refers to a customer’s ability to identify with their experience. The focus of customer satisfaction must not be on the competition. Due to consumer pre-purchase analysis, they select the best product from the rest. As a result, if the product does not live up to their expectations, they will not switch to a less expensive alternative.


To calculate customer value, costs are subtracted from advantages to arrive at customer value. It’s logical and can be explained in terms of money.

Customer expectations have a complicated equation of subtracting actual performance from expectations. These aspects are difficult to measure. It’s also quite personal. Because of this, it can only be explained in terms of quality.

Process of acquiring

The status of the differential between the customer’s advantages and costs prior to making a purchase constitutes the proactive component of customer value (pre-purchase).

Product or service experience vs. expectations is a reactive component that represents the condition of difference in customer satisfaction (post-purchase).

Purposes of implementation

Various goals can be served by measuring the value of a customer’s experience.

To determine the worth of your products and the information associated with them, such as communication systems, price, reviews, and so on, you need to consider the customer value. Consequently, you have the opportunity to expand your research and make improvements to these aspects.

What really matters to customers is how they feel about their experience with a company and what they can do to improve it. This is what you should look into if you want to boost client happiness. It’s critical to know what your customers want and how to deliver on their needs if you want to increase your performance.

Examples of Customer value and Customer satisfaction

Example of customer value

In the hospitality industry, values are just as important. A tiny boutique hotel on the beach in Florida may opt to incorporate: therapeutic, belonging/affiliation, and sensory appeal. It was possible to:

  • Offer massage, therapeutic yoga, spas, and meditation services (therapeutic).
  • Organize an online group or an annual event that emphasizes the other values their property promotes (affiliation/belonging).
  • Let guests stay in themed hotel rooms that transport them to another era and place (sensory appeal).

Example of customer satisfaction

IBM has been ranked the best firm in the world for customer satisfaction in the current Drucker Institute Company Rankings. Customer-centric software development means making decisions based on what end-users want and need, not just how they use a certain product. This is how they succeed.

IBM’s VP of Platform Experience Charlie Hill highlighted to Harvard Business Review that “we want to apply our design thinking muscles to investigate and play with how the user’s experience could be enhanced.”

In the end, it’s all about the consumer. To make a sale, consider the challenges your customer had before they came to you in the first place, as well as what success looks like to them.

Final Words

A company’s ability to achieve long-term success relies heavily on its customers, as evidenced by words like “customer value” and “customer happiness.” Due to their differing effects on the purchasing decision, the terms cannot be used interchangeably. After the original purchase, the customer’s happiness determines whether or not the product will be purchased again.

A customer’s evaluation of the product’s value begins after they’ve made a purchase and before they’ve even opened the box. It is more probable that a consumer will return if they are satisfied with the product, but if they aren’t satisfied, they are less likely to return for more. Understanding the distinction between these two phrases is essential to ensure that these theoretical notions are appropriately applied to achieve corporate success.

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