An Ultimate Guide to Customer Value

A Complete Guide to Customer Value

Building a successful eCommerce business isn’t just about having great products at a competitive price, it’s also about creating value for your customers throughout the shopping journey. Customer value provides an organization’s foundation for growth, as it affects nearly every metric that matters to an online store. Ultimately, it helps businesses boost revenue via increased conversion rate, customer retention, and loyalty, etc.

In short, delivering customer value is essential. But where do you start?

This article takes a closer look at Customer value: what it is, why it is important and how to measure it. Then, we’ll wrap up by providing some tips to enhance customer value using automation applications.

What is customer value?

Customer value is the net benefit a customer receives from a product or online store compared to alternatives. It’s been a well-researched topic in marketing for the past two decades and plays a crucial role in predicting customer choice. If a retailer can deliver value to a consumer, they are well on their way to creating a fundamental competitive advantage.

While there are many different interpretations of “customer value,” here are the two overriding definitions:

  • Product value: a shopper’s satisfaction with a product in relation to what they paid for it
  • Shopping value: a customer’s perception of an online store’s shopping experience and the user journey of finding, purchasing, and receiving their desired product

Many retailers focus first on product value and try to appeal to customers by offering the best product for the lowest cost. Yet rock-bottom pricing is not the only way to increase customer value, and it puts you in the unenviable position of ensuring ever smaller margins.

Though price does play a huge part in the perception of value, consumers also derive it from the online shopping experience. According to data in the paperVariable Relationships in Online Retailing: Cultivating Consumer Satisfaction and Loyalty,” this can include entertainment, convenience, interactivity, and visual appeal.

Moreover, while the temptation of a low-priced product is a considerable draw, consumers also appreciate a personalized experience as a part of an enjoyable online shopping environment. This is a significant opportunity for retailers to create a unique customer experience strategy valued by their target audience.

Customer value goes far beyond offering a lower price than the competition. It’s an umbrella concept that applies to both the shopping experience and perceived product value. Once a retailer knows what their customers value, they’ll gain a competitive advantage in the marketplace over their less knowledgeable competitors.

The importance of understanding customer value

As an E-Commerce marketer, you strive to create customer value-related strategies to cultivate long-term success. Understanding customer value is essential to predict customer behavior that will lead to such success, yet in online retail, gaining insight into this value may seem daunting.

In his classic Marakon Commentary, Ken Favaro, Chief Strategy Officer of BERA Brand Management, explains why customer value creation is such an important strategy:

“Understanding where, how, and why the value is created within your company and your markets are the best, most objective way to identify which of your activities and assets are distinctive enough to provide a platform for sustainable and profitable growth.”

Being aware of your customers’ wants and needs can lead to successful marketing because you can:

  • Determine which customers in which to invest (and which ones to prioritize)
  • Create a more targeted value proposition to attract more profitable customers
  • Enhance existing services to deliver an improved, more personalized shopping experience
  • Bolster product benefits by understanding how and why people use your products
  • Better understand your customers’ behavior, which will enable you to help them make better buying decisions
  • Find out what products high-value customers want

One landmark example of an enhanced customer value is Amazon’s 1-Click checkout, patented in September 1999. This feature allows shoppers to purchase an item with a single click.

add to basket and buy now button

At the time, the online checkout experience was tedious. Customers had to submit long, cumbersome payment and shipping information every time they bought something, even if they had previously provided their information.

Amazon knew their customers valued an expedient, hassle-free shopping experience, and that a lengthy checkout procedure resulted in increased cart abandonments and missed opportunities.

Armed with this knowledge of their customers’ habits, Amazon created the 1-Click patent, which helped generate traction for the company when it was first starting out. Their improved checkout experience promoted a greater affinity between Amazon and its customers and increased the perceived value of the shopping experience. Then, as their customer base grew, the company began to collect and use shopper data to create even more value for shoppers and to drive new customer acquisition, producing a virtuous cycle.

To build more meaningful relationships with customers, you have to engage with them and understand how and why they purchase items, both of which we’ll cover later in this article.

How to measure customer value

There are many models used to measure a customer’s value to a company, the simplest one for most e-commerce stores is Customer Lifetime Value (CLV).

The formula for Customer Lifetime Value can be defined as:
Average order value X Number of times the customer buys each year X Average length of the customer relationship in years

For example, a well-established interior designer who regularly buys picture frames from your shop may be worth:
$120 per frame X 20 frames per year X 7 years = $120x20x7 = $16,800

Whereas a new homeowner in their 30’s might be worth:
$35 per frame X 3 frames per year X 15 years = 35x3x15 = $1,575

In which segment would you invest more time and energy? The interior designers, clearly (unless you have a penchant for leaving money on the table!)

You can use CLV to calculate the profitability of a particular relationship and decide how to increase the value you deliver to that group. If your CLV moves up and to the right, this indicates you’re providing more value for customers. If it continually declines, you may want to revisit your customer experience strategy.

Besides, we want to introduce you to 2 automation tools that can assist you in measuring your customer value:

Google Analytics

Google Analytics (GA) is a tool offered by Google that helps you collect, analyze, and report on website traffic data. It keeps an ultimate record of almost everything that’s happening on your website—every page view, bounce, drop-off, conversion, along with every user’s traffic source, pages visited, country of origin, etc; but numbers and graphs alone can’t tell you what’s happening from the perspective of your users.


Hotjar is industry-leading behavior analytics and user feedback service that helps you understand the behavior of your website users and get their feedback through tools such as heatmaps, session recordings, and surveys. The app complements the data and insights you get from traditional web analytics tools like Google Analytics.

How to increase customer value

1. Expedite the shopping experience​

With online stores open 24/7, shoppers have more flexibility to shop anywhere, anytime. To increase customer value, you should be prepared to provide information about products to assist in purchase consideration and facilitate a sale.

You can achieve this with a Customer Chat window on your website. It enables automated answers at any time or connects shoppers to your sales agent. Having this option available helps customers cut down on “searching and browsing” time, and focus on the “buying” part.

Additionally, we can always have the customer service team notified whenever manual support or review is needed. This would assure no customer would be left behind.

One example of automated workflow:

When: Order completed
If: Total spending is greater than or equal to 500$
Then: Assign customers to a group
Delay: Wait for 1 hour
Then: Send notification email to the internal department

workflow to assign customer to a group and send a notification to your staff

2. Create a dynamic experience in your store

A dynamic experience in your store helps you take control of how your brand is perceived and how visitors shop, while also driving brand engagement & awareness. It can both increase the average order value (AOV) from your customers and inspire customers to return in the future. To achieve this, utilizing your store merchandising (layouts, product listing & categories, banners publishing, etc) is integral.

Atom8 can dynamically arrange products based on customer preferences: Sort out and prioritize products on your online stores based on different criteria (total views, total sold, reviews or purchases, etc).

When: Product inventory changes
If: Product total view greater than 200
Then: Change the product sort order to 0 (The lower product sort order is, the higher it is prioritized on the storefront)

workflow to change product sort order under certain conditions

Another way to create a dynamic experience for your customer is via flexible products’ visibility, banners, discounts.

When: Flash sale comes
If: Garden product is in “Flash sales” category

  • Change product price: Apply a 50% discount to all products in “Flash sales” category.
  • Change website theme: Change the theme to Flash sales
  • Publish blogs: Flash sales blog

Delay: Wait for 24 hours

  • Change product price
  • Switch back to normal price
  • Change website theme
  • Change theme back to normal

A Complete Guide to Customer Value

Third, Atom8 can also apply a dynamic price list for customers: Apply a specific pricing strategy (a percentage discount or special shipping method, etc.) for a certain group of customers. This can be applied to the store’s Primetime

When: Time trigger at 9 a.m daily
Then: Publish price list
Delay: Wait for 2 hours
Then: Unpublish price list

A Complete Guide to Customer Value

3. Post-purchase customer engagement

Online merchants should always keep the customers engaged with the brand. This interaction would bring about a great opportunity for upselling and cross-selling.

The first strategy is to take personalized care with a thank-you email. To optimize this process, after customers finish their purchase, your team can take advantage of Atom8’s automation function in auto-segmenting target customers and auto-delivering emails to them.

One example of Atom8’s automated workflow:

When: Order is placed
If: Product name includes iPhone

  • Assign the customer to the “Apple customers” group
  • Tag customers on MailChimp
  • Auto-send “thank-you” email to customer and offer 50% discount for all promoted Apple products via MailChimp

workfow to tag customer on mailchimp and send them a confirmation email

Secondly, it’s a good chance for the shop managers to take advantage of user-generated content. You can encourage shoppers to write a comment or story regarding their purchase immediately after its completion by sending a follow-up email. The Follow Up email could provide them promotions or codes if they make reviews. According to Spiegel Research Center, nearly 95% of shoppers read online reviews before making a purchase, and displaying reviews can increase conversion rates by 270%. Econsultancy also found that reviews produce an 18% uplift in sales.

Chapelle sending a review request to its customers

4. Reward loyalty

Customer loyalty programs are an excellent way for brands to connect with existing customers, better understand their audience, and drive repeat purchases.

Create a customer loyalty program to delight frequent shoppers and big spenders by granting them exclusive offers, promotions, early access, and relevant content. It’s a smart way to increase customer lifetime value and to keep people coming back to your store, time and again.

In this field, Atom8 can help with segmenting long lifetime & top-paid customers to optimize the process of loyalty programs.

As an example of Atom8’s workflow:

When: Order is completed
If: Customer lifetime spending exceeds $5000,

  • Add Upgrade customer tier to Gold
  • Send Thank-you email to customers

Delay: It can also wait for 24 hours
Then: Send a welcome offer email to new gold customers

A Complete Guide to Customer Value

5. Send personalized offers

There is no better way to provide an incredible customer experience and increase customer value than through personalization. In fact, in a recent survey of 200 marketing leaders by Forbes Insights and Arm Treasure Data, 37% of executives point to increased sales and customer lifetime value directly resulting from offering relevant product recommendations.

It’s a sensible conclusion. Each customer segment is different, with distinct desires and needs so it’s not ideal to show the same products or information to every customer. Segmentation and personalization enable you to create targeted marketing campaigns that engage each buyer at the right time.

When: An order is placed
If: Product name includes Iphone
and total amount inc. tax is greater than or equal to 200$

  • Add the customer to the group “Apple’s Loyal Customers”
  • Send engaging emails specified for Apple’s Loyal Customers via MailChimp

workflow to assign customer to a group and send them a email

Key takeaways:

At the end of the day, creating the different types of customer value for your business is essential to sustainable growth.

If you give your customers an experience that’s memorable, convenient, and enables them to meet their goals, you’ll be well on your way to attracting and retaining loyal customers. These are the people who will become advocates for your brand and repeat buyers—the best customers to have!

Want to increase customer value in your online store?
Get Atom8 today. It’s free to get started.


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