Customer value margin

A few days ago I attended a seminar at Transformator, a Swedish service design agency. They showed a very inspiring presentation with concrete and tangible examples – very refreshing in a design area that is still under development and where still most of its stakeholders seem to have a different view of what service design is.

It made me think that when designers get increasingly involved with business development it gets more important than ever to be clear about what values your efforts create. As always there is a incompatibility between qualitative and quantitative values – both can be defined but they cannot be evaluated with the same terms.

For example, if we look at the customer value of a product (a physical object or an immaterial service) we can measure the quantitative price, what the customer has paid. And we can roughly assume that this corresponds to the quantitative value, otherwise the customer would have kept his or her money. But when we then try to evaluate the customer satisfaction we can only measure if it is more or less than the expected value, not how much. Of course you may ask people how much they would have paid for something different, but it is only the actual purchase that can be reliable enough.

But maybe the measured value is less important than the notion of perceived customer value, and here it seems like we lack of terms. In order to relate to the existing business concepts, I would suggest the term ”Customer value margin”, and I think that the notion of this being either positive or negative might be useful enough in practical product development.

What is the customer value margin of your product?

Link to Transformator, click here.

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