What is total customer value (TCV)? Total customer value is the relationship between what a customer pays and what he or she receives when making a purchase. You can use TCV to assess the experience you deliver to customers and determine fair pricing for your offerings.

TCV helps you understand what customers value when doing business with you. When you assess TCV, you need to think about all of the costs and the benefits of buying from you.

Costs and benefits aren’t just monetary — think about your own buying experiences. An efficient sales or shopping process that saves you time benefits you. If you need assistance, you may appreciate quality customer support. Also, you may gain image or status by selecting a brand with an esteemed reputation.

Your total costs related to a purchase can include the time and energy you expend to make it happen. If you wait days for an ordered product to arrive and have to review online tutorials to use it, that’s a time-related cost. Stressful buying experiences or poor service are intangible costs that can diminish the value of a purchase.

Common uses for total customer value

  • Determining the perceived value of your products and services
  • Comparing the value you deliver to customers versus the value your competitors offer
  • Considering all the costs and benefits customers experience when buying from you
  • Setting fair pricing that ensures customers value what they buy from you
  • Understanding why and when your customers may feel “buyer’s remorse” after a purchase

Examples of how to increase TCV

Once you understand TCV, you can find ways to deliver more benefits for your customers. That way, you’ll increase the perceived customer benefits and come out ahead in the value vs. cost equation.

  1. Provide a free gift, rewards, or extra service: Give your customers something to show them that you appreciate their business. Loyalty programs that reward repeat purchases are a great way to increase perceived value and fortify customer relationships.
  2. Make it easier to buy from you. Streamlining purchase processes and shortening delivery times will benefit your customers. In e-commerce, recurring product subscriptions and one-click ordering are examples of this concept.
  3. Strengthen your brand perception and relevance. Strategize ways to make customers feel proud about choosing you. One approach is showcasing your commitment to causes customers care about.
  4. Provide standout customer experiences. Go the extra mile for customers whenever possible. Don’t just react to their needs — anticipate them.

Assessing TCV helps you understand your customers’ point of view. When you operate with a customer-centric mindset, you can create products and services that resonate with the market and win you more business.