The Customer Value Concept: How Best to Define and Create Customer Value?

An examination of the marketing and management literatures will very quickly reveal that customer value has been defined in a great many ways. As a result, it would be easy to assume this creates more problems than it solves. This chapter argues that this need not be the case. This is because the different approaches for defining customer value are much more suited to solving some customer value creation-related dilemmas and conundrums than others. With this in mind, three popular and widely employed categories of definitions of customer value are discussed to demonstrate this point: customer value is (1) the amount customers are willing to pay, (2) an equity position that customers perceive they have in an organisation and (3) an inherently multidimensional concept. An analysis of the pros and cons of each approach shows that the third approach is potentially the most enabling when systematically learning about customers, and developing and implementing the organisation’s customer value strategy, including when partnering with many external parties. To demonstrate this point, two frameworks are developed in this chapter using Woodruff’s (1997) very versatile multidimensional definition of customer value. The frameworks illustrate how this highly respected definition can be applied to build a boundary-spanning, customer value learning, co-creation and co-delivery (platform-based) system as an active participant within an institutionally complex ecosystem.