Customer Value vs Customer Satisfaction | Key Differences

Customer Value vs Customer Satisfaction | Key Differences

Customer Value and Customer Satisfaction. Know the difference

Consumers usually face a broad array of products and services that might satisfy a given need. How do they choose among these many market offerings?

Customers form expectations about the value and satisfaction that various market offerings will deliver and buy accordingly.

Satisfied customers buy again and tell others about their good experiences. Dissatisfied customers often switch to competitors and disparage the product to others.

Marketers must be careful to set the right level of expectations. If they set expectations too low, they may satisfy those who buy but fail to attract enough buyers. If they set expectations too high, buyers will be disappointed.

What is Customer Value?

Customer value is present when the benefits offered by a product are more than the costs used to acquire that product.

In other words, it is the trade-off between the benefits being obtained and the price being paid to obtain those benefits.

Customer value can be determined by subtracting total customer costs from total customer benefits.

Customer value = Total Customer Benefits – Total Customer Costs

The benefits to customers can comprise of product quality, warranty, after-sales services, maintenance and repair costs, free-of-cost delivery, the relationship of staff with customers, etc.

The total cost includes not just the cost of the product, but also the time and effort used, risks involved, emotional stress, and so on.

Customer value is essentially determined by some key factors like adherence to product standards, price, brand, product alternatives, customer experiences, and relationships.


Before customers make the decision to purchase a product, they assess its perceived value in comparison with the perceived value of other competing products available in the market. They will decide to buy the product/service that has the highest perceived value.

Hence, it is important for a company to perform better than its rivals in each and every aspect so as to be successful in the market.

High customer value is quite important for an organization as it leads to delighted customers, improved market share, satisfied employees, competitive advantage, and an enhanced image of the company in the market.


Value is computed by customers before purchasing a product as it enables them to choose the best product in the market.

Hence, customer value is a proactive process. It is also known as a pre-purchase assessment of the product by the customer.

When customers believe the value of a product or service to be low or if they believe that it offers comparatively less value in comparison to other competing products, then that product will not be bought by the customer.

Companies should assess customer value metrics as it would help them in developing a product that offers greater benefits than competitors at the price that the customers are willing to pay.

What is Customer Satisfaction?

Customer satisfaction refers to the evaluation by customers of how well the value was delivered by the product, i.e. did the product deliver the value that they expected to receive from it?

Hence, it takes place after the customer has purchased the product.

Customer satisfaction is the degree to which the customer’s expectations of the product were consistent with the way the product actually performed.

Customer expectation and the way they comprehend the actual performance of the product is more emotional in nature. A person feels satisfied and does think not satisfied. Hence, customer satisfaction is highly subjective and very difficult to measure.


The expectation of a customer may be affected by previous experience, suggestions from friends, the promise made by the seller, and information about competitors.

A customer can only evaluate a product after having experienced it; hence, customer satisfaction is a post-purchase phenomenon.

When customer experience fulfills the perceived value, then a customer achieves satisfaction with the product, and if it does not, then the customer is dissatisfied.

Hence, it can be said that customer value changes into customer satisfaction after the offering has been experienced by the customer.


Difference between customer value and customer satisfaction

Some points of difference between customer value and customer satisfaction have been listed below:

1. Meaning

Customer value is the difference between the total benefits expected from a product/service and the total costs incurred to obtain that product or service.

On the other hand, customer satisfaction refers to the difference between the actual performance experienced by a customer and the expectation of the customer.


2. Type of process

Customer value is a proactive process as it takes place before the customer has actually experienced the product, i.e. it is the prepurchase assessment of a product by a customer.

In contrast, customer satisfaction is a reactive process, which is basically the difference between the expectation of the customer and the experience of the customer after using that product/service.

Hence, it is the post-purchase analysis of a product by the customer.


3. Concept

Customer value is evaluated from the point of view of customers. It is essentially the thought process of the customers, where they carry out a comparison between the value gained from a product in comparison to that provided by a competing product, so as to determine the products that offer higher benefits at a low cost.

Customer satisfaction, however, is an emotional concept as it pertains to the feelings of customers. We determine how satisfied we are from a purchase on the basis of our experience of using that product/service.


4. How they are used

Customer value is a strategic measure that determines product compositions, pricing strategies, distribution methods, communication systems and processes.

On the other hand, customer satisfaction offers a means of assessing how customers respond to these measures. It is essentially a transactional measure that is used most appropriately in a post-sales interaction between the customer and the company.

5. Computation

Customer value is determined by simply subtracting total costs from benefits and can be described in monetary terms.

Customer satisfaction is measured in qualitative terms as subtracting actual performance from the expected performance is more subjective in nature. It involves emotions and is difficult to quantify.



To calculate customer value, costs are subtracted from advantages to arrive at customer value. It’s logical and can be explained in terms of money.

Customer expectations have a complicated equation of subtracting actual performance from expectations. These aspects are difficult to measure. It’s also quite personal. Because of this, it can only be explained in terms of quality.



About Author