Welcome to the Customer Value Glossary!
This is a spiritual successor to our CX Glossary, updated with new definitions and concepts for 2023. It retains and refreshes the original definitions and concepts, plus new terms to deepen your understanding of customer decisions, the environment they are made in, and advances in the technology being used to best measure them.
Let’s start with the obvious, the phrase behind the new name:
“Customer Value (CV) is a trade-off between benefits and costs perceived by the customer when considering a supplier’s offering, and market alternatives. It’s the ultimate factor behind customers’ decisions of expenditure and loyalty to your business. Different customer profiles value different things. Some are more sensitive to benefit trade-offs, others to costs, and others to the relative comparison with alternatives in the market.”
*See External Factors, Customer Value Trade-offs, Cost – Relative Price, Benefits, Alternatives
Why the change from Customer Experience? Our ultimate goal is to improve companies’ high-level strategic ability to align themselves with their customers’ needs and wants.
To meet that ambitious goal, we found that it was crucial to adopt a wider field of view in our research and thought leadership, which meant moving beyond the scope of CX.
While we still believe CX has a vital role in great organizations, it is also fully contained within Customer Value. Customer Experience has great strategic value to specific departments and roles, but it can’t be applied company-wide in all cases.
We find that Customer Value is the common ground that all departments can share as an overarching strategic measurement.
Customer Value has existed for over 30 years. Though it may seem like a counterintuitive step backward, we believe you’ll find that it was well ahead of its time, especially considering what’s now possible with modern research tools like Natural Language Processing AI.
The rate at which we can gather and process the necessary qualitative and conversational feedback has skyrocketed – just the soil that Customer Value needed to take root.
Jump to a Category – Customer Value Glossary
- Customer Value
- Customer Experience
- Market Research, Metrics and Analytics
- General Industry Jargon
Customer Value (CV)
Customer value is a trade-off between benefits and costs perceived by the customer when considering a supplier’s offering, and market alternatives. It’s the ultimate factor behind customers’ decisions of expenditure and loyalty to your business. Different customer profiles value different things. Some are more sensitive to benefit trade-offs, others to costs, and others to the relative comparison with alternatives in the market.
*See External Factors, Customer Value Trade-offs, Cost – Relative Price, Benefits, Alternatives
Customer Value Trade-offs
When assessing the value of a product or service, customers weigh out trade-offs prior to making decisions of expenditure. These are the factors that are (mostly) under the company’s control and are driving decisions of expenditure and loyalty.
These trade-offs are:
- Cost – Relative Price
- Benefits – Tangible and Intangible
- Alternatives – Direct and indirect competitors, substitutes
*See Cost, Benefits, Alternatives
Cost – Relative Price
Cost is the currency that customers exchange for benefits. It is best to track ‘relative’ price as opposed to ‘absolute’ price. Relative price is always the price when compared to another product or service with similar or equal benefit.
*See Customer Value Trade-offs, Benefits, Alternatives
Benefits – Tangible and Intangible
Benefits are what you receive in exchange for a cost. They can be tangible or intangible.
- Tangible benefits are those that are easy to explain because they have a concrete component to them. They are relational factors such as, the store or website, customer service, cleanliness, effort, or they are related to the goods, such as quality. These drivers tend to deliver the most valuable insights to how the operational side of the business affects customers’ perception of worth.
- Intangible benefits are not easy to explain because they are abstract and are even difficult for social scientists to explain simply. They are behavioral elements such as social proof and brand identification. These elements are notoriously hard to measure at scale and are usually reserved for data scientists or behavioral economists to research and map out qualitatively with focus groups or in-depth interviews. These drivers tend to have a greater impact on the Marketing/branding side of the business. There are 2 main intangible benefits: social proof and brand identification.
*See Social Proof, Brand Identification, Customer Value Trade-offs, Costs, Alternatives
In Robert Cialdini’s “Influence”, he proposes that our purchase decisions are often shaped by the perception that others have of us. This phenomenon known as social proof has deeply influenced the way certain brands market their products and services. Elements of marketing such as scarcity, FOMO (fear-of-missing-out), status, premium, and exclusivity all play towards this narrative. How our friends, family, and society will perceive and judge us based on our purchases has a strong impact on our decision to buy them.
*See Benefits, Brand Identification
The biggest brands in the world have carefully crafted their brands so that they align with the personality, beliefs, and identities of their customers. Brands are depicted as people, as emotions, as beliefs, to connect on a deep, emotional level with their customers. When executed properly, not only are brands influenced by their customers, but they also influence their customers’ personalities and identification in return.
*See Benefits, Social Proof
Customers always consider other available options prior to making a choice. ‘Alternatives’ refers to all the players in the market that could affect customers’ perception of the value of the products or services offered by a company.
- Direct competitors offer the same solution to the same problem.
- Indirect competitors offer a different solution to the same problem.
- Substitutes are solutions that have not previously been used to solve that problem.
*See Customer Value Trade-offs, Costs, Benefits
Customer Value Alignment
Customer Value Alignment (CVA) is the process of closing the gap between the value customers perceive and the value your company delivers. This process is continuous, since customers’ needs, wants, and expectations are always changing.
*See Customer Value Alignment Cycle, Customer Value SWOT, SWOT Analysis
A SWOT analysis is strategic planning and management technique used by organizations to identify Strengths, Weaknesses, Opportunities, and Threats related to business competition or project planning. It is presented as a square divided into four quadrants, each dedicated to an element of the SWOT. The benefit is a quick visual overview of a company’s strategic position.
– SWOT exercises and studies are typically conducted internally, often with input from consultants. As such, it is vulnerable to subjectivity, personal and/or company bias, and human interpretation.
– SWOT is difficult to track continuously or at scale. It is nearly always conducted as a point-in-time study, thus any strategies based on it do not remain strategically relevant for long.
*See Customer Value SWOT
Customer Value SWOT
The Customer Value SWOT is conducted within the same conceptual framework as a normal SWOT (Strengths, Weaknesses, Opportunities, Threats). The key difference is that it is 100% based on Voice of Customer feedback.
- This removes or greatly reduces the risks of internal biases stemming from subjectivity, personal/organizational bias, and human interpretation.
- Through Worthix, Customer SWOT Analysis can be performed continuously and at scale as opposed to an ad-hoc, point-in-time study. This way, it is possible to accurately track changes over time in each quadrant.
*See Voice of Customer (VoC), SWOT Analysis, Qualitative
A customer’s perceived value is influenced by external factors that could be difficult or impossible for businesses to change. Companies have little to no control over these external factors, such as climate, socio-economic issues, politics, pandemics, or market innovation and disruption. But while they cannot control these external factors, they can track how they influence customers’ perception of value. This creates an opportunity to add incremental innovation that keeps companies safe from disruption and able to remain aligned with customer value.
*See Customer Value
Customer Value Alignment Cycle
Customer value is in constant flux, so it must be tracked and acted on continuously and dynamically for a company to stay relevant. The Customer Value Alignment Cycle is the 3-step process of aligning your organization with the value your customers expect. It is used to continuously track perceived and unmet customer value among all the experiences a company delivers, allowing companies to keep their strategies, product innovations, and day-to-day operations aligned to what drives customers’ decisions of expenditure and loyalty.
The Worthix Customer Value Alignment Cycle breaks down into 3 steps:
1. TRACK VALUE WITH CONVERSATIONS
LUCI, Worthix’s artificial intelligence orchestrates unlimited one-on-one conversations led by your customers
2. FIND ACTIONABILITY
Blend conversation results with metadata, test hypotheses, and find actionable opportunities
3. CO-CREATE INNOVATION
Join in on LUCI’s conversations, ask additional questions, and innovate on customer value
*See Customer Value, Customer Value SWOT
Disruption is the process in which a product becomes popular enough to replace a traditional or common product or service. These kinds of disruptions have historically impacted industries, sometimes reshaping the entire competitive landscape.
A common misconception in markets all around the world is that it is the most innovative companies that disrupt industries. However, we believe that this is simply not true for the vast majority.
Consider companies that are innovating constantly. Many of their inventions may never be adopted by consumers, but if they continue to innovate, they may create something that customers want eventually. In this case, the customer has the power to accept or reject innovations based on whether it has value to them. Therefore, companies are never the primary drivers of disruption, no matter how innovative they are. In order to prevent disruption, companies must understand how, when, and why customers’ perceptions of value shift over time so they can adapt in order to stay relevant.
*See also Customer-Driven Disruption, Innovation
Innovation is a new way of delivering customer value that no other company has introduced. It can take the form of new technology, new processes, new material, or a new way of delivering an existing value proposition.
- In business, innovation and disruption are often used interchangeably, but this is not universally true. An innovation that is incremental – for instance, a slightly higher-resolution camera on your smartphone each year – does not disrupt the state of the industry. It does improve the value of the product or service in some tangible way, but it does not change the dynamic of the existing market.
- A disruptive innovation is one that causes the market to shift around it or in response to it. Specifically, it is an innovation that initially targets a low-end market foothold that incumbent players have neglected due to targeting the higher end of their market, which offers stronger margins. The disruptor can dominate the low-end market because incumbents have no strong incentive to compete there, which allows the disruptor plenty of room to improve and upscale their offering to eventually compete directly. This causes consumers to gradually change their buying habits, expectations, and values, which in turn forces incumbents to make a decision: challenge the disruptor’s offer directly or continue to slowly bleed market share.
- However, disruptive innovation is only possible when customers’ perceptions of value are open to change. Therefore, companies are not the primary drivers of disruption, no matter how innovative they are. In order to prevent disruption, companies must understand how, when, and why customers’ perceptions of value shift over time so they can adapt in order to stay relevant.
Natural language processing is a subfield of linguistics, computer science, and artificial intelligence concerned with the interactions between computers and human language, in particular how to program computers to process and analyze large amounts of natural language data. NPLs for omnichannel are typically used to analyze data sets extracted from Voice of Customer Platforms, such as call center, chatbots, surveys, and online reviews. Worthix’s AI, LUCI, has an NLP module on the front-end, used to process customer conversations and respond in real-time with follow-up questions and deep dives.
*See NLP, LUCI
Customer equity is the sum of the lifetime value of all of a company’s customers. It is a quantitative marketing metric companies use to project the profit they will gain from their customer base. Understanding value will contribute to staying aligned with customers, therefore contributing to loyalty.
*See Customer Lifetime Value
Marketing Mix (the 5 Ps of Marketing)
The classic Marketing Mix, or 5 Ps of Marketing, is a common framework used in marketing plans. The 5 P’s are Product/Service, Price, Place, Promotion, and People.
- Product/Service – What is the good/service being sold?
- Price – What is the set price of a good/service?
- Place – Where physically does a buyer have to go to get the good/service?
- Promotion – How is the good/service being promoted?
- People – Who is selling the good/service?
The Marketing Mix can have several variations. Some companies only use the first 4, and some go into further detail by adding Process and Physical Evidence (the Modified 7 Ps).
- Process: The procedures, mechanisms, and flow of activities by which service is delivered
- Physical evidence:
- The environment in which service occurs.
- The space where customers and service personnel interact.
- Tangible commodities (equipment, furniture) that facilitate service performance.
- Artifacts that remind customers of service performance.
- Physical evidence:
Customer Driven Disruption is the idea that major market shifts occur as a result of customer decisions, rather than the decisions of any single company, no matter how innovative they might be with products, services, or experiences.
*See Disruption, Innovation
Customer Experience (CX)
Customer Experience is everything perceived, felt, and remembered by a customer, empathetically related to both their social reality and personal (or professional) needs before, during, and after a purchase. CX is comprised of perceptions of quality, social status, relationship, brand identification, and relative price.
Any interaction that the user of a product or service has with the provider. This term is most commonly used when referring to software applications, but can apply to any product or service. Seamless, effortless interactions and intuitive design are considered key to a good UX. Be careful, it’s easy to mix up UX and CX concepts.
Example: Apple’s UX is regarded very highly for being intuitive for new users, quick to adjust to, and able to integrate features and apps across multiple devices easily.
Customer Success (CS)
The department within a company responsible for managing the customer relationship.
Customer Success (CS) has the enormous mission of being responsible for managing and carrying out the customer-supplier relationship and ensuring that customers are successful in using its products and services. The concept of success is strongly linked to value delivery – that is, how your product or service delivers value to your customer.
Refers to the entire lifecycle of a customer’s experience with a brand or product.
This concept encompasses the entire path that the customer takes within the company – from prospect to converted customer. Once the company identifies which stage of the cycle the customer is in, it is possible to perform segmented and specific actions, based on different offers and interactions.
The customer lifecycle has five main steps to success. They are:
Acquisition: Conversion of segmented leads into customers;
Activation: Activation occurs when the user experiences the product/service and has his first experience as a customer, at which point he begins to see the value that was offered;
Retention: Tactics to keep the customer base engaged, through Customer Success processes;
Referral (Recommendation): Moment when the customer perceives the value of the product/service and recommends it to others;
Revenue: Conversion of customer base into financial return.
The path the customer takes, from the moment the need arises to beyond the moment it’s fulfilled. Your customer journey is designed so the company can manage the customer experience at all available opportunities of interaction.
Customer Journey Map
A visual aid charting the path the customer persona takes, from the moment the need arises to beyond the moment it’s fulfilled. A map identifies stages, actions, and feelings experienced throughout the journey. It provides an overall understanding of customer pain points, efforts, inquiries, concerns, and other valuable insights on the customer experience.
Market Research, Metrics and Analytics
Artificial Intelligence (AI)
The theory and development of computer systems able to perform or mimic tasks that normally require human intelligence, such as visual perception, speech recognition, decision-making, and translation between languages. In a business setting, AI systems are frequently used to automate routine tasks, freeing human agents to handle more complex interpersonal tasks.
Machine Learning (ML)
Machine learning is a sub-field of artificial intelligence (AI) that provides systems the ability to automatically learn and improve from experience without being explicitly programmed. There are two main methods of training a Machine Learning model: supervised and unsupervised machine learning.
Supervised: Machine learning that utilizes training data that contains both example domain elements and their correct outputs. Usually, this must be labeled by hand.
Unsupervised: Machine learning that utilizes training data that contains only example domain elements without the
expected outputs. Examples include clustering data.
Natural Language Processing (NLP)
Broadly defined as the automatic manipulation of natural language, taken as speech or text, by software.
An approach to measuring experiences by observing signs and phenomena via non-numeric data, such as human actions, reactions, and behaviors. In most cases, this is done through interviews and focus groups.
An approach to measuring experiences by observing signs and phenomena via numerical data, usually through statistics, mathematics, and computations.
Worthix (or Worth Index)
A metric that measures how “worth it” a product or experience is to a customer. It can be explained by analyzing the 5 key Decision Drivers (Price, Social Proof, Quality, Relationship, Brand Identification) and determining the impact that specific experiences have on the customer’s decisions. The name comes from the final question we ask ourselves before every buying decision, “Is it worth it?” It’s an index, an indicator or measure of something. Together the words make up the Worth Index, thus, Worthix.
Net Promoter Score® (NPS)
A survey metric to measure customer word-of-mouth potential. Created by Fred Reicheld and Bain & Company, NPS asks customers how likely they are to recommend a company to a friend and then lumps them into one of three categories: promoters, passives, and detractors. The Net Promoter System and Net Promoter Score are registered trademarks of Bain & Co. Inc., Fred Reichheld and Satmetrix Systems, Inc.
Customer Satisfaction (CSAT)
A simplistic survey metric used to assess whether a customer is satisfied or not. Defined as “the number of customers, or percentage of total customers, whose reported experience with a firm, its products, or its services (ratings) exceeds specified satisfaction goals.”
A questionnaire that companies use to poll customers and get organized feedback. When these surveys are developed internally, they risk being invalidated by preconceived, unconscious biases that originate from the company’s particular point of view. To avoid skewing survey data, it is almost always better to outsource the development and administration of surveys to a third party.
Customer Effort Score (CES)
Customer Effort Score (CES) is a single-item metric that measures how much effort a customer has to exert to get an issue resolved, a request fulfilled, a product purchased/returned or a question answered.
Customer-Based Corporate Valuation (CBCV)
Customer-based corporate valuation is the process of valuing a firm by forecasting current and future customer behavior using customer data in conjunction with traditional financial data.
A sample is a set of individuals or objects collected or selected from a population by a defined procedure. The appropriate sample size for the measurement of a statistic will vary based on the size of the population being surveyed and the variance of the statistic being measured. A larger sample size will, in general, reduce the margin of error on a measurement.
An estimate for plausible values of a population statistic. It has an associated confidence value/gamma. If an experiment were repeated, the fraction of the confidence intervals produced that contain the true statistic would tend towards/gamma.
Margin of Error
The half-width of the confidence interval.
Market segmentation is the process of dividing a market of potential customers into groups, or segments, based on distinct characteristics. The segments created are composed of consumers who will respond similarly to marketing strategies and who share traits such as similar interests, needs, or locations. These segments can be used to create buyer personas, which are a helpful aide for both sales and marketing teams.
Share of Voice (SOV)
A measure of the market your brand owns compared to your competitors. It acts as a gauge for your brand visibility and how much you dominate the conversation in your industry. The concept is similar to a brand being “top of mind” when customers think of a product or service.
Share of Wallet (SOW)
Share of wallet (SOW) is the dollar amount an average customer regularly devotes to a particular brand rather than to competing brands in the same product category.
The percentage of an industry, or a market’s total sales, that is earned by a particular company over a specified time period. Market share is calculated by taking the company’s sales over the period and dividing it by the total sales of the industry over the same period.
Voice of Customer (VoC)
Any customer feedback captured through various channels that can be used to determine customer expectations, preferences, and aversions.
Listen to Season 9 of the Voices of CX Podcast
Customer Lifetime Value (CLV)
A prediction of the net profit attributed to the entire future relationship with a customer. Methods for calculating this value vary in terms of accuracy and sophistication.
Empathy at scale
The ability to maintain empathetic, human-centric interactions with many people at once.
One of the most difficult challenges in business is maintaining human empathy as an organization grows. As business processes and staff expand and diversify, people in higher-ranking positions (C-suite especially) tend to become increasingly distant from their core customers over time.
The gathering of important or relevant information for the purpose of strategic decision-making.
Includes information about customers’ experiences, perceptions, transactions, or competitors.
Abbreviated as intel.
Example: A CEO needs significant amounts of business intelligence to make critical decisions about corporate strategy. This business intelligence often comes in the form of reports from other C-suite roles (such as the CMO, CFO, CPO, etc.) which contain key metrics and information about customers, products, financial data, competitor strategies, market trends, etc.
Human in the loop (HITL)
A model where the outputs of a system are monitored and/or altered by a user.
Example: An AI program using HITL is monitored by humans for inaccuracies and screened for biases.
A customer’s opinion or evaluation of a product or service. Can be affected by subjective or objective comparisons.
Perceived value is a relative measure, subject to whatever alternatives to any particular product or service currently exist in the market.
Example: The perceived value of a Big Mac may be higher for someone who has never eaten a Wagyu burger, or vice versa.
A type of advanced analytics used to predict future events and trends based on historical data through a variety of techniques, including artificial intelligence, machine learning, and data mining.
Natural Language Understanding (NLU)
A subcategory of computer science that looks at what language means (reading comprehension), rather than simply what individual words say.
Example: Voice assistants, such as Siri, Alexa or Cortana, or certain chatbots, use NLU to interpret user intentions by recognizing intent and entities within spoken or written language.
Worth It Conclusion
The “yes, it’s worth it” conclusion is the last and most powerful conclusion customers come to before making most of their decisions. When something is the most “worth it” alternative, it means the customer has already agreed to pay the perceived costs to have access to the expected emotional and rational benefits. Therefore, knowing if your business is the most “worth it” alternative to your customers, is more important than knowing how satisfied they are or whether they will recommend your business.
Worthix (or Worth Index)
A metric that measures how “worth it” a product or experience is to a customer. It can be explained by analyzing the 5 key Decision Drivers (Price, Social Proof, Quality, Relationship, Brand Identification) and determining the impact that specific experiences have on the customer’s decisions.
Customer Decision Process/Loop
This process begins when either the market or life generates a need or expectation in the customer. The customer considers market offers, weighs their benefits, assesses their thoughts and feelings about it, and then decides whether it’s worth buying or not. The choice may differ from what the customer desires, as long as it fulfills the present need.
Example: I need a car. I want a Ferrari. The limiting factors of my budget or the road conditions of my city limit me to the benefits of a Toyota Corolla.
Any factor involved in a purchase decision that has the potential to drive the decision toward a conclusion. The five primary decision drivers, Quality, Price, Social Proof, Relationship and Brand Identification, explain 92% of “worth it” conclusions.
When a customer identifies with a brand, they believe the brand understands who they are, their lifestyle challenges, and contributes to their personal values and objectives.
Example: A coat from REI will keep you warm and it’s guaranteed that it’s made with a certain amount of recycled materials. It’s both functional and fulfills personal values that environmentally conscious customers identify with.
Social Proof (or Social Status)
This perception is related to how much the customer understands that what they consume is accepted and approved by people in their current or desired social profile. The higher the social status, the more they perceive that they stand out positively and are accepted within the group. The lower the social status, the more they perceive that they stand out negatively and are excluded from the group. It is understood that the product or service is accepted and used (or not) by people within the customer’s own persona.
Example: A Mercedes Benz is often associated with a richer individual of higher social standing, while a Toyota is often associated with a poorer individual of lower social standing.
Impact is a measure of how much of an effect a decision driver or experience has on your customers’ perception of worth. Worthix measures impact for each of the 5 primary decision drivers (Quality, Price, Relationship, Social Proof, Brand Identification). Impact is a measure of how important that driver is to your customers.
Example: If your Quality driver has an impact of 7 and your Relationship driver has an impact of 4, you would expect a change in the Quality driver score to change your total Worth Score more than an equal change in the Relationship score, all else being equal.
An AI that interacts directly with the end-user in real time. Possible end-users can include both customers and customer service agents.
Examples: Worthix adds front-end AI (LUCI) to Voice of Customer surveys. LUCI inserts targeted questions into the VoC questionnaire to probe for more details while the customer is engaged, streamlining the gathering of detailed and highly relevant feedback.
AI-based chatbots can be considered front-end AI for customer service.
Personal voice assistants (Ex. Siri, Alexa, Cortana) are considered front-end AI.
An AI language assistant suggesting conversational routes to an account rep. or service agent would be considered front-end AI (Cogito).
An AI that functions outside of the view of/does not interact with the end-user.
Example: An AI might sort previously gathered data into categories for easier use by human designers and/or analysts. Back-end AI is used in numerous applications at almost every organizational level and/or department. Some common uses include automation, data analysis, monitoring, alerts, and language recognition.
Software as a Service (SaaS)
A business model that delivers and/or licenses software that is accessed over the internet via the browser or an application, without installation. Typically operates through a recurring revenue model, where services or applications are paid for periodically.
General Industry Jargon
A fictitious person that represents a larger group of customers through various social demographics such as similar lifestyle, interests, needs, goals, challenges, and buying habits. Personas are useful for segmenting marketing strategies and communicating who the customers are across an organization, usually through a customer journey map. They should be designed based on both customers’ needs and revenue-generating potential.
Those perceiving the experience(s) who have the need or desire for something. They typically search the market to find the most worth-it option to fulfill their need.
Example: at a toy store, the parent is the buyer and their child is the shopper.
Disconnected departments within an organization, often working to service the same personas throughout the same customer journey. A silo develops when information is not shared across departments and Key Performance Indicators (KPIs) and goals aren’t in alignment to fully deliver the company’s value proposition. Silos often result in an inconsistent and flawed customer experience.
Those perceiving the experience(s), who hold the power over the money that will be used to pay for the shopper’s goods.
Example: at a toy store, the parent is the buyer and their child is the shopper.
The individual in the role of influencing the buyer and/or shopper in the customer decision-making process.
Example: At a toy store, the parent is the buyer, their child is the shopper, and relatives/friends/social media/ads/celebrities are the influencers.
A class of goods identified by name as the product of a single firm or manufacturer, as well as the reputation, public image, or identity that is marketed and/or promoted. This is achieved through products, people, processes, location, communication, and competition.
An additional positive or negative value that customers attribute to products or services based on the brand associated with it. This additional perceived value can affect the speed of a purchase decision, loyalty, price perception, awareness, forgiveness for potential issues, and perceived experiences.
Example: Positive brand equity: Target can be associated with good service, clean stores, and solid product selection. Negative brand equity: Walmart can be associated with poor service, dirty stores, and haphazard product selection.
A customer is a person who needs something and is willing to pay money to get it, as long as they think the purchase is ‘worth it’. If the seller is able to deliver an experience that is perceived as the most worth it option available on the market, they should expect to achieve strong business results.
A company whose culture focuses on effortlessly and seamlessly fulfilling customers’ needs and current expectations. All individuals in the organization are aware of the direct and indirect impact that their work has on the overall customer experience at every touchpoint.
Customer Feedback Loop
The customer feedback loop is the process of continually gathering insight from customers and improving business processes and offerings based on this insight.
Close the Loop
A term used in business often associated with a “closed-loop” control process, where the output of the system feeds directly into improvements of the system itself. When there’s a problem with the product/service, “closing the loop” is also following up with the customer to correct the problem.
Any innovation, service or feature provided by a company to make them more attractive to customers. Customers must consider if a company’s value proposition is worth it to them before making a purchase decision.
Any part of a customer journey or customer experience where the brand interacts with or influences the customer in any way. This covers any brand communications, direct and indirect interactions, as well as any considerations the customer makes with the brand in mind.
The churn rate, also known as the rate of attrition or customer churn, is the rate at which customers stop doing business with an entity. For a company to expand, its growth rate (measured by the number of new customers in a certain period) must exceed its churn rate.
Return on Investment (ROI)
A performance measure used to evaluate the efficiency of an investment or compare the efficiency of a number of different investments. To calculate ROI, the net profit (or return) of an investment is divided by the cost of the investment. The result is expressed as a percentage or a ratio.
Example: I spend $400 on a gold watch (investment). The watch goes out of production, and the aftermarket price increases. I sell it a month later for $500. My return on investment is 25% ($100).
Top of Mind Awareness (TOMA)
In marketing and market research, top-of-mind awareness refers to a brand or specific product being first in customers’ minds when thinking of a particular industry or category.
The capacity to be changed in size or scale. In business, often refers to process implementation, especially in large organizations.
Example: The scalability of the new sales software helped sales representatives reach more potential clients in with the same amount of time and effort.
Person to Person (P2P)
In business, P2P places an emphasis on a human-centered approach to communication, especially regarding marketing and sales. The practice can also be extended to Customer Success, Customer Service, and to some degree, Product.
Regardless of an organization’s size, people are still the fundamental audience, and any marketing materials, communications, or strategies should be designed as such.
Can be used interchangeably with Human to Human (H2H).
A standard or point of reference against which things may be compared or assessed.
In business, companies use competing products or services as benchmarks.
Compiled from a large amount of data and information about the market, businesses, and consumers that enable intelligent analysis and more assertive decision-making
Business to Consumer (B2C)
Describes when companies deal directly with the final consumer. For most everyday purchases of goods and services, you would be considered a B2C customer.
A customer talking to his energy supplier
A customer buying something in a retail store
A customer buying something in a supermarket
Business to Business (B2B)
When companies deal directly with other companies instead of with the consumer.
Amazon purchases software licenses from Microsoft for department use
CAT sell or leases construction equipment to a contractor
Intel purchases raw materials to manufacture chipsets and other hardware