Value Gap

A value gap refers to the disparity between the value a customer anticipates from a product and the actual value they experience after its use. This gap often stems not from insufficient features but from educational hurdles or a subpar user experience that hinders customers from fully appreciating the product's capabilities.

The notion of the value gap became prominent with the emergence of the Software-as-a-Service (SaaS) model. Unlike traditional one-time purchases, subscription services necessitate ongoing value delivery to keep customers engaged. Thus, grasping the difference between the value that is promised and what is actually experienced became crucial for business sustainability.

In today's marketplace, characterized by low switching costs and a plethora of alternatives, customers are empowered and expect instant gratification. Consequently, addressing the value gap is vital for businesses aiming to minimize customer churn and foster lasting loyalty.

The impact of the value gap spans nearly all industries, but its effects are particularly pronounced in sectors with high customer choice and easy switching options. When the expected benefits do not align with the actual experience, businesses encounter significant repercussions across various fields.

Although both the value gap and price gap involve miscalculations of value, they are relevant in distinct business scenarios.