A fascinating experiment was carried out with wine enthusiasts a while back. Participants were given two bottles of wine and asked to share their tasting notes for each. Bottle A was presented with a $5 price tag, while the other bottle bore a $45 price tag. Despite both bottles containing the exact same wine, the majority of volunteers asserted that the pricier wine tasted superior to the cheaper one.
This exemplifies the concept of perceived value in action! Let’s delve into its mechanics and explore how you can elevate the perceived value of your own product or service. Continue reading to uncover the secrets.
What Constitutes Customer Perceived Value in Marketing?
Perceived value represents a customer’s assessment or opinion of a product or service, shaped by their perception of its costs and benefits. This encompasses factors such as whether it fulfills (or has the potential to fulfill) their needs and expectations, how it stacks up against competitors, and its overall quality. It’s noteworthy Studies have shown that our decision-making processes, particularly those related to purchases, are often driven by emotional triggers. Consequently, instead of solely relying on manufacturing costs when evaluating the worthiness of a product or service, customers often base their judgments on subjective perceptions and emotions.
Harnessing the Influence of Customer Perceived Value
Capitalizing on the power of perception can yield numerous advantages for your business, including:
Commanding Higher Prices
As the perceived value of a product increases, businesses gain the ability to charge a premium price or sell a larger quantity, ultimately leading to heightened revenue. A prime illustration of this principle is Apple released a polishing cloth in 2021, priced at a notable $19.
The New York Times characterized this pricing strategy as “bold, even by Apple’s standards, a company renowned for its loyal customer base accustomed to premium pricing.” Surprisingly, the polishing cloth emerged as Apple’s most back-ordered item in October 2021. Astonishing, isn’t it? Such is the remarkable influence of perception.
Elevated Customer Satisfaction
Customer satisfaction is often directly correlated with perceived value. When customers hold a positive perception of your products, they are more inclined to believe that their needs are being met, especially as a validation of their investment. However, it’s crucial to emphasize the importance of delivering on this perceived value to avoid potential disappointment in the long run.
Fostering Customer Loyalty
By effectively conveying the superior value of your offerings compared to competitors, you enhance your prospects of establishing enduring relationships with customers. As an illustration, let’s consider PC Mag’s perspective on Apple’s polishing cloth: “The Apple Polishing Cloth exemplifies the potency of the company’s branding—it’s remarkable that even Apple’s official guide on device cleaning (Opens in a new window) simply recommends using a ‘clean, damp, lint-free cloth.’ As long as Apple offers a product that aligns with this definition, dedicated fans will readily make the purchase.”
Amplified Demand
It logically follows that individuals who perceive your product favorably are more likely to convert into customers and disseminate positive word-of-mouth referrals, ultimately contributing to increased demand.
Practical Strategies to Enhance a Product’s Perceived Value
Having explored the benefits of perception for businesses, let’s shift our focus to practical methods for shaping this perception. Here’s how you can effectively increase the perceived value of your small business:
1. Cultivating Scarcity
By strategically implying that a product’s availability is limited, you subtly suggest that it’s either selling rapidly due to popularity or possesses an inherent rarity that enhances its value. This tactic is widely employed by e-commerce platforms to evoke a sense of FOMO (fear of missing out) and boost conversion rates. Let’s examine some straightforward yet impactful examples of scarcity-driven copywriting:
- 20% discount expiring in two days
- Out of stock / only X units remaining
- Limited to x purchases per customer
- Your selected item is reserved in your cart for 15 minutes
2. Strategic Price Adjustments
As evidenced by the wine-tasting experiment and highlighted by other studies show, consumers often establish a correlation between higher prices and increased value. Renowned social psychologist Robert Cialdini posits that customers tend to equate price with quality, particularly when encountering unfamiliar products. However, it’s essential to exercise prudence—avoid setting a $19 price tag for a simple cleaning cloth like Apple. The key lies in experimenting with your product pricing strategy to identify the optimal balance point.
3. Highlighting Markdowns
Another effective technique for enhancing customer perceived value involves demonstrating that your product’s worth exceeds its stated price. Consider these approaches:
- Display the original price alongside sale or bundle discounts.
- Quantify additional savings or benefits customers gain, such as time and resources, and assign a monetary value to those advantages. The New York Times exemplifies this strategy below by emphasizing that customers are essentially receiving $4.25 worth of news for a mere $1, rather than paying a dollar per week.
Image source
Consumers frequently encounter such enticing deals on online shopping sites. It’s imperative to maintain transparency and avoid exaggeration, as excessive embellishment could create an impression of being an untrustworthy infomercial.
4. Implementing Charm Pricing
Have you ever noticed the prevalence of prices ending in “99”? For instance, a $5 item is often displayed as $4.99, and a $1000 product becomes $999. This strategic pricing tactic is known as “charm pricing,” and according to research by the Journal of Consumer Research and this MIT study, consumers tend to perceive “odd prices” as being more affordable than they actually are. The online sales platform Gumroad conducted an experiment that confirmed the effectiveness of charm pricing in significantly boosting their conversion rates. The results are as follows:
5. Utilizing High-Quality Visuals
One inherent challenge faced by online shoppers is the inability to physically interact with a product, preventing them from verifying authenticity or assessing quality firsthand. To overcome this hurdle, employ high-quality visuals that effectively showcase the product’s most compelling features and benefits. Bellroy excels in this area by featuring a slider bar on its website that enables customers to compare wallet sizes based on the number of credit cards they intend to carry.
6. Showcasing Customer Testimonials and Reviews
Potential customers are inherently inclined to seek insights from existing customers regarding their experiences with a product or service. In fact, statistics reveal that 93% of individuals are influenced by online reviews, and online product reviews enjoy 12 times more trust than a manufacturer’s description. This underscores the critical importance of incorporating customer testimonials and reviews into your website and social media platforms. Not only do testimonials and reviews enhance your perceived value, but they also serve to alleviate concerns among potential customers, differentiate you from competitors, and cultivate trust and credibility.
7. Providing Exceptional Customer Support…
Businesses that prioritize memorable customer experiences not only benefit from positive word-of-mouth referrals and glowing online reviews but also enjoy higher customer retention rates. Furthermore, customers are often willing to pay a premium for exceptional support and an overall positive experience. Personalized support plays a pivotal role in elevating the perceived value of your products and services. Consider these customer support initiatives to enhance product value:
- Establish an exclusive community for your valued customers.
- Host periodic live Q&A sessions or webinars.
- Offer personalized one-on-one consultations and meetings.
8. …and Ensuring a Seamless User Experience
Continuing on the theme of customer experience, it’s crucial to ensure a consistently positive experience across all interactions with your digital assets. Prioritize the following aspects:
- Fast page loading speeds
- A high-quality experience devoid of intrusive pop-ups
- Seamless mobile functionality
- Accessibility for all users
- Visually appealing design
- A wide range of convenient payment options
- A streamlined and user-friendly checkout process
Free guide >> 9. Collaborating with Influencers
Engaging the services of individuals your target audience knows and trusts to endorse your product or service can significantly impact your perceived value. You don’t necessarily need to allocate a substantial budget for celebrity endorsements. Instead, identify influential figures within your niche and explore strategic collaborations and outreach opportunities.
10. Prioritizing Branding
The significance of branding in shaping customer perception cannot be overstated. Regardless of the quality of your products or services, customers may overlook the true value you offer if your branding and design are lacking. To harness the power of branding, ensure consistency and visual appeal across all your brand assets, both digital and physical. This encompasses your website, social media channels, email communications, packaging, promotional merchandise, signage, and more. Daily Harvest serves as an excellent example of a company that seamlessly blends effective branding with visually appealing product imagery to successfully market its nutritious smoothies.
11. Offering Free Trials and Samples
As the creator of your product, you possess an unparalleled understanding of its intricacies. However, not every potential customer will invest the time to delve into its features and benefits. Rather than simply proclaiming the merits of your product or service, allow prospects to experience it firsthand by offering free trials or samples. The act of extending this offer, in itself, conveys confidence, thereby enhancing perceived value. Numerous B2B SaaS providers have adopted the strategy of providing free plans or short-term trials as part of their customer acquisition efforts, effectively bolstering the perceived value of their offerings.
12. Embracing Social Responsibility
One effective method for appealing to customers’ emotions and improving their perception of your brand and products involves demonstrating social responsibility. Studies have shown that consumers are more inclined to pay a premium for products associated with socially responsible companies. As humans, we are inherently wired for cooperation. Acts of kindness toward others elicit positive feelings, and these feelings are amplified when we can contribute to a worthy cause while making a purchase. Consider allocating a portion of your profits to a cause you believe in or giving back to the communities you operate in. Customers derive satisfaction from supporting such businesses, which, in turn, enhances their perceived value.
13. Understanding Your Audience
Even if your product reigns supreme in the market, its impact will be minimal if it fails to resonate with your target audience. It’s paramount to understand the emotional drivers behind their purchasing decisions, the benefits they seek, and the pain points they wish to avoid. Your value proposition should stem from a deep understanding of your target audience and the creation of detailed buyer personas.
Conclusion
The key takeaway from this comprehensive exploration of customer perception is its undeniable importance in achieving business success. Your customers are the driving force behind your growth, and they seek reassurance that their investment of time and money is justified. By placing their needs at the forefront of your marketing endeavors and implementing the strategies outlined in this post, you can effectively enhance the perceived value of your products and services. Here’s a concise recap of the key points:
- Introduce an element of scarcity.
- Strategically adjust pricing.
- Highlight markdowns and discounts.
- Leverage the power of charm pricing.
- Utilize high-quality visuals.
- Showcase customer testimonials and reviews.
- Provide exceptional customer support.
- Ensure a seamless user experience.
- Collaborate with influencers.
- Prioritize branding.
- Offer free trials and samples.
- Embrace social responsibility.
- Gain a deep understanding of your target audience.