ISPMA Webinar on "Multidimensional nature of perceived value and the right metrics to measure "Product Success"

1. Multidimensional nature of
perceived value
&
Determining right metrics to
measure ‘Product Success’
Sanjeev Kulkarni - Founder Productshaala

2. Defining Value
● The Webster dictionary defines value as “relative worth, utility, or
importance “.
● Value of a Product must be seen in two contexts:
○ Value to the Organization / Business (Real Value) - e.g in terms
of ROI
○ Value to the User / Customer (Perceived Value) - e.g Solves a
problem, Satisfies an inherent need, Creates a ‘Want’.
● Perceived Value = Perceived Cost v/s Perceived Benefit
● Can ‘Perceived Value’ be measured?
Image Source

3. Perceived ‘Value’ v/s ‘Actual Value
● Real value is related to the actual manufacturing cost and the price the product is
sold at for profit. In layman's terms, the real (or actual) value is what the product is
actually worth, without any outside expectations from the consumer or seller.
● Perceived (or intangible) value is what consumers think the product is actually worth.
Product Managers and Marketers, create intangible value to make up for real value.

4. Can we tinker with ‘Perception’ rather than
change ‘Reality’?
The perceived value of Products can be jacked up without really changing the ‘Product’.
The ‘Expensive Wine’ conundrum !
1. Even experts can’t tell apart cheap and expensive wines in blind taste studies.
2. Researchers at Stanford GSB and the California Institute of Technology found that if a person is told they
are tasting two different wines — one costs $5 and the other $45 (but they’re actually the same wine) —
the part of the brain that experiences pleasure will become more active when the drinker thinks they are
having the expensive wine.
3. As Freakonomics put it, “When you take a sip of Cabernet, what are you tasting? The grape? The tannins?
The oak barrel? Or the price? Believe it or not, the most dominant flavor may be the dollars.”

5. Multiple dimensions of
perceived value

6. Functional Value
● Functional value is concerned with the utility
derived from the product quality and product
performance.
● The goal is to select functional benefits that
have the greatest impact with customers and
support a strong position relative to
competitors.
Image source

7. Social value (social or symbolic benefits)
● Social value is the utility derived from the product's ability to enhance
social self-concepts, such as status.
● Going to the most ‘Prestigious’ college in the city may take precedence
over ‘Learning’.
● It may be cool to have a soft drink like ‘Coke’ over ‘Coconut Water’ or
‘Sugarcane Juice’ due to their perceived value in certain social circles.
● Certain brands of cars such as Audi and BMW may elevate your social
status.

8. Emotional value (experiential or emotional
benefits)
● Emotional value refers to the utility
derived from the feelings, or
affective states that a product
generates.
● Emotional response to an ad
influences consumers’ intention to
buy much greater than the ad itself.
Hierarchy of needs (Pereira, de
Campos and Camarini, 2012).
https://www.iskysoft.com/article/the-20-funn
iest-mac-vs-pc-memes.html

9. Epistemic value (curiosity-driven benefits)
● Epistemic value refers to the surprise or novelty aspect of a
product; a product's capacity to arouse curiosity, offer novelty
or satisfy a desire for knowledge.
● Example: The ability of web-series on Netflix and Youtube to
get you glued to the screen for hours is a classic case of
curiosity driven ‘Value’.

10. Epistemic value (curiosity-driven benefits)
Does this product
arouse your curiosity
to try it?

11. Conditional value (situation-specific
benefits).
● Conditional value refers to the
situation in which the value
judgment is made.
● For example, specific situations such
as Valentines Day and weddings can
strongly enhance the perceptions of
value.

12. Value as a combination of -
Multiple dimensions of
perceived value

13. Value comes as a combination
● Products often deliver value as a combination of multiple dimensions.
● Example iPhone:
○ Functional Value: Lets you make calls and send text messages.
○ Social Value: Elevates your status amongst your peers.
○ Emotional Value: When gifted to your loved ones - creates a great emotional bonding.
○ Epistemic Value: There is always a level of curiosity as regards to new features in the next
iPhone release.
○ Conditional Value: The perceived value differs when you buy an iPhone during an occasion v/s
when there is no such occasion. E.g Buying an iPhone during Diwali v/s in the month of March.
Image source

14. Value comes as a combination
● Software Products also deliver value as a combination of multiple dimensions.
● Example - Linkedin:
○ Functional Value: Lets you stay connected to your CAREER friends (Colleagues, peers, mentors,
role models etc.)
○ Social Value: Will be left out in your career journey, if you are not connected on Linkedin.
○ Emotional Value: Messages, Appreciations, Recommendations, Endorsements, Articles and
posts, all add an emotional value to the Product.
○ Conditional Value: The perceived value may differ based on where and which device you access
Linkedin on - iPhone or Android, Windows or Mac, etc.

15. Value comes as a combination
Example Google Slides:
○ Functional Value: Lets you create beautiful and professional slide decks, while easily collaborating with fellow
authors.
○ Social Value: Google slides lets you collaborate extensively with peers. It is ‘Cool’ to use Google slides or Keynote,
over MS Powerpoint, in the Startup world.
○ Emotional Value: The utility, available Google Fonts, the look and feel of the slides, and beautiful templates add to the
emotional value of the product.
○ Epistemic Value: There is always a level of curiosity as regards to new features in the next release.
○ Conditional Value: The perceived value differs based on whether you are using the tool to create Slides for
professional purposes (As a Startup Founder your presentation may be worth millions of $$) or as a Student.

16. Measuring Perceived Value

17. Can Value Perception be measured?
● How much Cash ‘Value’ can you attribute to a $500 limited period redemption voucher
for certain categories - Like Salons?
● Every 100 points on your credit card may be worth $1. How do credit card companies
arrive at this conversion?
● How much would you be willing to pay for a product or a service?
● Can you measure which dimensions of ‘Perceived Value’ your product fares better at?

18. Techniques to Measure
Perceived Value

19. Measuring Customer Satisfaction / Quality
with CSAT
● Customer satisfaction is a resultant of the ‘Perceived’ customer
value.
● Customer Satisfaction Surveys are the best way to measure -
Product Quality and overall Customer Satisfaction.
● CSAT is typically based on a number of statements that customers
rate their agreement or disagreement with.
● CSAT surveys may not be easy to carry out if they are longer than
2-3 questions, due to lack of interest.

20. Measuring Customer loyalty with NPS
● Net Promoter Score®, or NPS®, measures Customer experience, Customer Loyalty and predicts
business growth.
● Calculate your NPS using the answer to a key question, using a 0-10 scale: How likely is it that you
would recommend [brand] to a friend or colleague?
Source

21. Customer Effort Score (CES)
● Is it hard to find products on your favourite e-commerce website?
● Are you overwhelmed by by the profusion of self-service
channels—interactive voice response, websites, e-mail, chat, online
support communities, social media such as Facebook and Twitter,
and so on?
● The effort customers take to get an issue resolved or to find a
product or a solution, or to place an order will impact the NPS. But
this effort can be measured via the CES (Customer Effort Score).

22. Net Easy Score (NES)
● BT developed an own approach which combines multiple measurements including customer effort for
contact centre interactions.
● Way to measure how easy customers find it to “interact” with your organization.
● Instead of asking “how much effort did you personally have to put forth to (handle your request)” with a
score from 0 to 5 the company asked “Overall, how easy was it to get the help you wanted today?”.

23. How to use these techniques for Software
Products?
● CSAT and NPS scores could be measured for software products - The surveys could
reside on-product, in-App or within platforms.
○ Example - a movie ticketing app (like bookmyshow in India) may take your
feedback after a successful ticket booking.
○ In the enterprise world - enterprise apps usually take feedback when an app
crashes abruptly - to understand what exactly happened. This impacts customer
satisfaction as well as Net Promotability.
● Customer effort score and/or the Net Easy score may be good KPIs for customer
support teams - but can very well be used to measure the Software Product
Success.
○ For example - Success of features such as ‘Self Service Returns’ on platforms like
Amazon.com could be measured using CES or NES.

24. Appendix

25. References
● https://www.van-haaften.nl/customer-satisfaction/customer-satisfaction-models/76-multi-dimensional-nature
-of-perceived-value
● https://hbr.org/2010/07/stop-trying-to-delight-your-customers
● https://www.netpromoter.com/know/
● https://www.i-scoop.eu/customer-effort-score/
● https://www.mycustomer.com/experience/loyalty/perceived-value-is-key-to-customer-experience-how-can-it-
be-measured