The Marketing Unleashed Podcast – Why is customer perceived value important to businesses and brands?
Joel: Hello all, and thanks for listening to the marketing on this podcast. So, in today’s episode I have Rachel and Jamie joining me, and we’re talking about the importance of customer perceived value for brands, services, and products. Now, why is customer perceived values so important to business or brands? And I guess I started off with a question to all three of us, although I already know the answer for myself. If you’ve ever gone to a restaurant, or retailer, and you bought something and you were just totally disappointed by it, and you thought, “Why did I spend so much money on that?”.
Rachel: Yeah, definitely.
Joel: Okay. I mean, that’s a pretty common thing for any US consumer, I feel.
Jamie: Oh, yeah. Because retailers are so good at- what’s the word- it’s they’re just creating a beautiful setting for something to make, they’re dressing it up. Whatever it may be, they’re dressing it up and making it look so much better than what it actually is, no matter what the product is. And a lot of times, especially in restaurants you see this a lot, if it’s just like cocktails especially, if it’s like a soda, if it’s just a soda, you put that soda in a really pretty glass, put a lime or a lemon with it, crushed ice, an umbrella, what did you just do to that? You just upped the price to $4.00-
Jamie: …just by prettying it up.
Joel: Yep. Oh, absolutely.
Jamie: You just increased that perceived value and putting it on a nice cocktail napkin.
Rachel: Even though it’s worth about fifty cents.
Jamie: Even though it’s just a soda.
Joel: So the funny thing is, whenever you go into a gas station the highest margin is the soda. I mean, it’s like a cup is maybe 5, 7 cents, the soda’s probably, I don’t know, 8, 9 cents? 10 cents at most-
Joel: …and they charge you a dollar, or so.
Joel: For a fountain soda.
Joel: It’s crazy, but that’s-
Jamie: They’re not prettying it up.
Joel: …but that’s the perceived value though, it’s I’m thirsty, I want a soda, I’m going to go into the gas station and get a fountain drink, because a bottle soda that half the size is twice as much.
Jamie: And it’s in a nice package, it’s in a bottle.
Joel: Yep, yeah.
Jamie: Sometimes even a glass bottle.
Joel: Right. Yeah, now you’re talking high dollar.
Jamie: Yeah, you know the FIGI bottle of water, the VOSS bottle of water.
Jamie: You only get that VOSS bottle of water when you’re at a night club or something.
Jamie: It’s just tap water. Have you seen most expensive is on VICE-
Jamie: …with the 2 Chainz?
Joel: Uh-uh (negative)
Jamie: They did a segment with, it was water, okay? And you can do this water experience. I forgot what they called this guy, it was like a Somalia of water, and you can get the most expensive water on the planet from some spring somewhere in Switzerland. And the guy is trying to explain to you why this water is so much better than any other water on the planet, and how certain waters taste different. And this bottle of water has a gold cap, and it’s like a $5,000 dollar bottle of water.
Jamie: But it’s the perceived value, because you get all this stuff with it, you get to keep the bottle, it look like a pimp cup, really it did. And it’s like a crystal glass, it was-
Rachel: It’s just water.
Jamie: …but it’s just water, but it’s that customer perceived value. It’s what they’re doing.
Joel: Well, okay, that brings us into kind of our first discussion topic here. The difference is the value. Because usually when people think of value they think, “okay, what’s the cost compared to the result?” Or, “What am I getting for my money?” But the value could also be time, convenience, it could be that the perception of, if I purchase this $5,000 dollar water that comes in a chalice, or whatever it comes in, and you’re like, “Oh, well, you know, people are going to look at me”, and you post it on your Instagram or Facebook or whatever-
Joel: …you have.
Jamie: That is-
Jamie: …that is value to that type of person.
Joel: Exactly. Yeah, it’s the value of status, social status-
Joel: …or whatever it is. Whatever you want to call it. But it’s intrinsic. I mean, the $5,000 dollar water is going to hydrate you the same as the tap water you know. Which I was always envision like the FIGI people just sitting there with the tap and bottle-
Joel: …you know.
Rachel: With a hose.
Jamie: Yeah. They just want the bottle. It’s like back in 8th grade, everyone was carrying around the Gap shopping bag. It just had their gym clothes in it, or whatever, but you were so cool to just be walking around with the Gap. It was a shopping basket.
Rachel: And paper bag.
Jamie: It was just the drawstring one, you know what I’m talking about?
Rachel: Oh, yeah.
Jamie: And I remember going to the mall with my mom, and I was like, “Can I just ask if I could just have, I don’t want anything, I just want the bag to carry around my stuff?” Because everybody was carrying it. That had value.
Joel: Yeah, yeah.
Joel: I mean, in reality it didn’t-
Jamie: It didn’t.
Joel: …but it had value-
Joel: …to you.
Jamie: …that persona of to be that girl walking around with the Gap bag.
Joel: Yeah, I mean, you held your head a little bit higher. You had a little bit more pride-
Joel: You know, you were happier about yourself.
Rachel: Right. Mm-hmm (affirmative)- I’m heard the same thing, like I wanted a Gap shirt just because it had like the Gap label-
Rachel: …and just a regular old t-shirt.
Joel: Yeah, and now I don’t care what my clothes say.
Jamie: Oh, I know.
Joel: You know. Yeah, now-
Jamie: Time’s have changed.
Jamie: So like another good example, so this just happened to me and Aaron recently. Everyone’s doing yard work right now, okay. So we have spent a lot of money at Lowe’s recently on lawn equipment, and we just bought a hedge trimmer and we just bought a power washer. Now, we have some acreage, and a lot of hedges, and it’s like a jungle out there. So, really wanted a hedge trimmer, and decided to get one, and it wasn’t that much, but the value there was really tied. Because we have these grasses that normally you have to use the big clippers, and to do that it hurts my back, it takes a lot of time, and to go ahead and spend the money on a hedge trimmer, that value to me was, it was time. And it was worth it.
Joel: Well, and it’s the aches and pains of your back.
Jamie: Right. So it was a logical decision for me, and it saved time, and I really didn’t care about the price. That value to me was worth more than, it was worth money.
Rachel: And you probably thought about it for a while before you purchased.
Jamie: Right, you know we did the research to pick out a good one, and it was absolutely worth it.
Joel: Well, okay, so that’s a good point. It’s not the value that the supplier sees in their product of service. It’s the value of the customer. You bought the hedge trimmer because you wanted to save time, and save the physical pain of having to do it manually.
Joel: Okay. But somebody else may buy the same hedge trimmer and see a totally different reason. I mean, I don’t know what they’re using it for, maybe they’re using it for improper uses, who knows, but-
Jamie: Let’s hope not.
Joel: …well let’s hope not, but you can use the hedge trimmer example, you can use the water example. I’m sure there’s some person out there that buys bottled water to bathe in, because they just don’t trust the-
Jamie: You can.
Joel: …I mean, you can, yeah.
Jamie: You can get that Evian bath.
Joel: Right, but is that water any different than any other water? Probably not. From a chemical compound, probably not. So, Rachel, all right, you have the Etsy store, you have your own products going. How do you perceive the… I don’t want to say how do you perceive the value of your product cause to you it’s like, oh a million dollars, you know, per item. What do you think about when you try to envision yourself as the customer?
Rachel: Well, I always try to think of how much I would pay for a similar product that someone else was selling. So, I mean, I try to keep my prices fair like that. I make towels. I charge $12.00 for them. I wouldn’t pay 20 bucks for this, even though I put a lot of work into it, and it’s handmade, but I just try to think of what I would spend on similar things.
Jamie: So you put yourself in their shoes?
Rachel: Mm-hmm (affirmative)
Joel: Yeah. Oh, absolutely, yeah. But then again, let’s just use cars for example, okay. You can go buy a Ford or a Chevy, you know, a car, right, and you pay $15-$20 thousand dollars, okay. Or you can go buy a Lamborghini and you’re going to pay hundreds of thousands of dollars for it. So, yes, there is a difference between the engines, there’s a difference between some of the features, but is the end result any different? Does it not get you from point A to B?
Jamie: Well, I think you have to look at your customer, and get to know them a little bit, and really look at what are the main things that this customer is looking for in their car. Is it a family, and are they really looking for a kid hauler? Or they looking for something more sporty? Do they need something really big? You really got to look at what is the best, quote unquote solution for them, and look at it that way. Sometimes they’re really not going to care about the engine. They’re not going to be looking for a truck. Families not going to be looking for that. You really got to look at what is going to suit their needs. What is the best solution for them? Because that’s really what they’re buying in the end. It’s a solution.
Joel: Right. Now, okay, so Rachel, what do you think is the emotional attachment to the value of all the things that we buy?
Rachel: Personally, I guess, pretty high. Well, are you talking about things that I make or-
Joel: No, no-
Rachel: …just in general?
Joel: …just the general. Anything.
Rachel: The emotional value?
Rachel: Usually things that I buy, it’s because I think about it for a while, and it’s something I really want, and I think I really need it, and I’m not going to buy something that I have just, a nice purchase, and I-
Jamie: Every kind of effect, it doesn’t spark joy.
Rachel: Mm-hmm (affirmative)
Jamie: It must-
Rachel: Do I really-
Jamie: …spark joy.
Rachel: …do I go home and still think about it-
Rachel: …and then go back and get it?
Joel: Is that the Netflix organization-
Rachel: She is a book.
Jamie: It’s kind of what I do. If I go home and I’m still thinking about it I want to go back and buy it.
Rachel: Yeah. That’s what my process usually is.
Joel: Yeah, well, I think it’s Snoop Dog or Dr. Dre, he has that famous line, “I keep my mind on my money, and my money on my mind”, and I think that holds true whenever people think of value of products whenever they’re evaluating whether or not they want to buy something. And you just said it, “If I still think about it when I go home, if it stays in my mind, I know there’s going to be some kind of value to me”. Because, obviously every physical tangible item that we buy is attached to our income, and paychecks, and the money in our bank account. So, there has to be that consideration.
Jamie: You’re right though. There has to be some type of emotional connection because you automatically look at it, and you’re like, “Oh, I like that”, “Oh, that’s so cute”, “Oh, yeah, I can choose that”.
Rachel: Unless it’s like your basic necessities stuff that you need-
Rachel: …to get, but something that you don’t really need to have to survive. Then the emotional aspect really comes in to play.
Joel: Well, and I think what brands need to do is really, they can put out the message of, “Hey, we sell water, you buy the water because you’re thirsty, we put it in a cool bottle, you’re unique”. People are going to think that you’re upscale because you buy this expensive water. That’s fine, but I also think that brands need to ask the customers for the feedback, “How are you using the product?” Because a lot of times, customers will invent new ways to use the product. You said, Evian has like a bathing water?
Rachel: Mm-hmm (affirmative)
Joel: Okay, I guarantee you Evian did not come up with that. They probably heard of a customer that was using it, and they probably were like-
Joel: …”Hey we can re-market this.”
Jamie: It’s a hotel that does it.
Joel: Oh, really?
Jamie: Some fancy-
Jamie: …hotel in New York.
Joel: All right, so-
Jamie: You can do the Evian bath.
Joel: Right, so perfect example. Somebody else decided, “Well, you know, people pay premium to drink it, why wouldn’t people pay premium to bathe in it?”
Jamie: Well, is something I was thinking about in researching this topic; I wonder how the tobacco industry does this?
Joel: Does what exactly?
Jamie: Well, for the longest time the tobacco industry did not do commercials, and now the Jewel is doing commercials.
Joel: Yeah, the-
Rachel: Vape thing.
Jamie: The vape thing.
Joel: The e-cigarettes-
Joel: …and that kind of stuff.
Jamie: And so, the latest one that I saw was the one where they guy is saying, I guess the value proposition statement that he said was, “You know when I tried it, and found that it really worked”, and I was like, “What do you mean it worked?”
Jamie: What works?
Joel: Yeah, cigarettes work too, but they’re still terrible for you.
Jamie: Yeah, it was so ambiguous and I was just so confused, like “What do you mean it works?” I don’t get it.
Joel: Yeah, I-
Jamie: So how are these vaping companies, and the tobacco industry in general, what is their perceived value? What are they doing?
Joel: It’s the-
Rachel: Cleaner people think it’s-
Rachel: …better for them-
Rachel: …than smoking regular.
Jamie: Well, obviously, people think that.
Jamie: I guess.
Joel: Well, because whenever they first came out, I think vape, the e-cigarettes came out as these solutions to quit smoking-
Joel: …to wean yourself off. And then I think they figured out that people are never going to stop, they’re just going to keep buying the chemical that they sell to put in the e-cigarettes. It was genius on their part, because they probably knew the entire time that people are never going to actually quit. It’s an addictive substance-
Jamie: Unless they want to.
Joel: …yeah, unless they really want to. Yeah, but as far as I know, tobacco companies still cannot advertise. I know they can’t advertise on TV, I know they can’t-
Rachel: There’s print ads and-
Joel: …they can be print.
Joel: Okay, yeah.
Jamie: Yeah, because I see them still in magazines.
Joel: Yeah. The e-cigarettes, and all that, I guess they just haven’t been regulated yet, because they’re technically not tobacco.
Jamie: Yeah, I’ve never seen a print ad for any of the e-cigarettes.
Jamie: I don’t think.
Joel: Yeah, all right, so what should brands look for when they’re evaluating their customers perceived value on their products? Should they be focused on how often a product is consumed? Are they repeat buyers? What are some of those key metrics that would tell a brand whether or not the value of their product is good or not?
Jamie: I think surveys would be a good idea.
Joel: Mm-hmm (affirmative)
Rachel: Or reading reviews on their own websites. I always wonder if companies actually do anything, because sometimes I will go on a clothing website, and people will be like, “What happened to these jeans? They use to be so much better, and you’ve changed something, like bring back the old ones”. I always wonder if someone’s reading this and they’re actually doing something about it-
Rachel: …or not.
Joel: Yeah. Or it goes to the complaint department that’s a trashcan.
Joel: No, I think customer surveys is good. Point of sale data is obviously a good indicator if you’re selling highly consumable goods that have a frequency, then that’s one metric.
Joel: Because obviously, there’s very few products that doesn’t have competition out there. Especially on the retail environment. And if you keep selling through your products rapidly through repeat customers then that’s a pretty good indicator.
Jamie: Yeah, they need to look at their analytics and see what’s selling, what’s not.
Joel: Right, yeah. And as far as service-based businesses I would definitely say reviews. You know, restaurants, that’s why Yelp is so popular. If you’re trying a new restaurant who doesn’t go to Yelp before?
Jamie: Oh yeah, we’ve talked about this before-
Jamie: …the power of the review.
Jamie: People love that Yelp, and that Trip Advisor, and that’s the one thing that everybody looks at.
Joel: Yeah. Oh yeah.
Jamie: They will threaten you, “I’m going to leave a bad review on Yelp”.
Joel: Yeah. It’s like, “All right, go ahead, whatever”, you know? But eventually that bad review turns into 10 or 15 or more, or 20 or more, and then it’s like, “Oh, well maybe you’re just bad”.
Jamie: Yeah, because people, if they have a ton of great reviews, especially on Trip Advisor, if you’re a hotel, or something like that, they get a badge. So it definitely means something out there.
Joel: Yep. Let’s kind of wrap this up and summarize everything. Well, first, I should ask does anybody have anything to add?
Rachel: I don’t think so.
Joel: No? All right. So, whenever we’re talking about perceived value we definitely want to make sure that the customer feels like they’re getting, number one: the value of their money. Number two: The intrinsic, the happiness, the fulfillment. And then number three: It could be saving time, or convenience, just some way that your products or services help the customer. That’s definitely important whenever a company or brand is trying to evaluate their perceived value. And then, obviously, we are emotionally attached to our dollars, and cents, and products, correct?
Jamie: Right, in Rachel’s instance, when she was talking about her Etsy business; when you’re showcasing a product, show it in a way that relates to the customer. Show it in its environment. Show it in a way that will have an emotional connection.
Joel: Right. Yeah. Yes, so if you’re selling a pillow you put it on the couch, or if you’re selling a shirt you kind of create the outfit in the imagery.
Joel: Yep. All right. And then as far as how to measure the perceived value of your products or services, obviously asking questions, measuring, point of sale, data, reading reviews, we said surveys. Just any way that you can get customers to talk back to you.
Joel: Yep, all right. Well, I think we’ve wrapped it up. All right, thank you very much. And when we come back we’ll have “Can’t Let It Go” for this week.