Adding the experience component

There is a further unexplained element at play in this Value equation – a highly subjective parameter which is driven by the experience that a customer enjoys during her journey with the brand.

Imagine each of these experiences continuously being aggregated in the mind of the customer, creating a net emotional score with (preferably) a positive valency. This would have many benefits…

Consider situations when a customer is willing to be Price inelastic for non-rational (emotional) reasons. Or, when a customer is willing to buy a seemingly inferior product for the same price as its competitor. Perhaps the customer is being forgiving in accepting a lower quality of service for the same Price.

Could this phenomenon and its measurement parameter be labelled?

As it is in the traditional model, Value is directly proportional to the Quality promised to a customer and inversely proportional to the Price charged.

In addition, customer experience (a hitherto ignored factor) is now built in. In mathematical terms, we can represent this new view as:

Value = f (Quality/Price, Ԑ)

 where V = Value; Q = Quality; P = Price; and Ԑ = Experience

Discussions with economists, marketers and academicians, lead us to believe that this concept indeed could be called ‘Relationship Surplus’!


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s