Successful companies owe their effectiveness to a thorough knowledge of their customers. Focusing on customer value and realizing that the purpose of business is to create and sustain mutually beneficial relationships results in the customer deriving value from the relationship with the firm, which is then converted into firm value in the form of increased profitability.
Customer value is the value that the customer derives from the relationship with the firm, but also the value that the firm derives from the relationship with the customer. In this context, firms are forced to realize that to maximize profitability through lifetime customer relationships they have to invest in their customers. The philosophy of customer value is that customers have goals that they seek to meet and the role of the firm is to assist them in achieving those goals.
Focusing on offering superior solutions to customer needs, treating customers respectfully, facilitating customer requests, setting fair pricing, and connecting with customers on an emotional level, firms communicate customer value through value proposition, that is the total group of benefits the firm promises to deliver. Consequently, customer satisfaction occurs.
Customer satisfaction is a post- purchase effect following a purchase selection. Customers enter into a purchase decision with certain expectations about what the product or the service will do when used, and they hope to be satisfied in the aftermath. Expectations are based on factors such as past buying experience, the brand, word-of-mouth, the firm’s promotional material and communication, the competitive environment, own mental maps and, of course, price.
Customer satisfaction is an important short-term attribute when considering the current state of customer base. Organizations typically measure customer satisfaction with surveys and questionnaires. This is because customer satisfaction is basically an abstract concept related to psychology, which means that satisfaction is subject to individual mental maps and needs. Therefore, organizations focus on after sale support to make customers feel special and consider that particular products are offered to satisfy their individual needs. The state of customer satisfaction is subject to psychological variables and to how customers compare the firm’s products against competition. So, organization must commit to customers at a great level so that customers engage into a strong, valuable relationship.