Value Marketing is important for any business, not only marketing professionals, but anyone in business. Discounting is not an acceptable way to gain customers unless you want to race to the bottom.
What exactly is Value Marketing? It’s all about understanding the benefits your customer gets from your product. In other words: your customer’s perception of your product and what costs they believe are required to get those benefits.
Value Marketing takes into consideration both qualitative and quantitative measures. It’s all about getting in your customers head, the goal is to look at what your customers physical, mental and emotional states, you also need to understand your customers perceived value in terms of profit or money gained.
To get to the value of your product or service, you need to understand the perceived usefulness, worth, importance of your product and service in the mind of your customer.
Below we look in-depth on the different areas of Value Marketing:
Functionality and Features
What is your product or service? What can it do and how does it work? For example, an iPhone can be used in many conditions, comes with many accessories and has many applications which can extend the capabilities of the device.
Jobs your customers are trying to complete
What job does your product or service do for your customer? For example, most people would say they bought a drill to drill a hole. While this is true, what they really wanted was a hole.
Did the customer buy the drill or the hole? If a drill company examines the higher purpose of drilling a hole, they could say, “we make the best and biggest holes” and this could mean the company no longer needs to make drills that are faster, smaller or last longer.
A good book to read: When coffee and kale compete or you can watch this short clip which great overview of Jobs To Be Done (JTBD).
The interactions between a customer and your organization throughout their relationship with your business. Customer experience doesn’t stop just there. If you want to grow the revenue your customers pay, you need to understand how to keep them loyal, and invest in their experience.
Presentation is everything. We all know that a good first impression is important and it’s even more important in business. Whether we admit it or not, we are all judgemental and just like you, consumers will create an impression of your business and brand.
Brand value can be based on a number of factors, from the colour of your logo, your website, the way the phone is answered, the way your employees are dressed, your business cards or even the cleanliness of your store. You could call it superficial, but these minor details are considered at every time your business comes in to contact with a customer.
When customers can personally identify with your product, they will place more value on what you provide. Your brand identity is a fundamental element of your strategy, but what is more surprising is that few organizations are able to answer what their identity is with certainty and clarity.
Purpose and mission statements don’t always help, many businesses can be vague as: “we help you save time and money” or “we are committed to delivering a successful product.”
In a recent survey, companies that have a stronger identity outperformed others by 25%.
The perceived view and relative importance people place on how your product affects experiences in their life. It’s important to consider and measure social value from the perspective of your customers.
For example the value experienced from increasing confidence, or by living next to a beach or public park. These little things are important and aren’t always spoken about or measured.
There is no right or wrong answer as far as value-pricing is concerned, everyone is different and values things differently. It’s important to customers what they would have bought instead of your product or service. Their answers will tell you who your toughest competitors are.
Choose one of your competitors and complete the value-based maths for yourself:
- What does your product or service cost?
- How much is your competitor’s?
- What are all of the differences?
- How would you value these differences?
- How do your customers value these differences?
How to set value-based prices
- Find your customer’s ‘second-best option’ – if they can’t buy your product or service, what would they choose?
- Get the price of this option;
- List all the ways your product is better;
- Estimate how much these differences are worth to your customers;
- List all the ways that the second-best offering is better;
- Be honest, how much do your customers value these differences.
To calculate the best price
- Take the price of the second-best option;
- Add the value of your advantages;
- Subtract the value of the second-best option’s advantages.
Can be seen as products that save time or services that make things easier such as, a home delivery service that also provides you with the latest movies on demand.
Appealing to value-oriented consumers is straightforward: if you provide a good quality product or service, you will find your customers. However, convenience-oriented customers can be more complex.
It’s important to understand friction that your customers face or rather eliminate this friction. These days people expect a smooth, seamless sales process. At any point where they have to give added effort is a point of friction.
How successful is your business at delivering value to your existing customers? For example, your business could be a cold-calling agency; showing your potential customers how many leads or sales you bring to your customers could be more important.
Testimonials and case studies are excellent tools for showing off your value. Anyone who’s considering your product will feel comfortable, knowing you have helped others in similar situations.
Products and services that make your customers feel safe and secure. Safety based value can focus on how your business addresses, mitigates, reduces or even eliminates risk and loss. For example; many online businesses are now focusing on how they protect personal information from hackers, viruses, and other concerns.
The visuals you employ use need to emotionally engage your potential customers, so you can generate the response you are trying to achieve. Experiences and environments like a hotel lobby or the styling or a party venue can be crafted to be visually appealing to enhance the value.
How do you encourage customers to interact and share the experiences you create? A well-crafted engagement strategy will help your business grow and drive loyalty, and when you focus on customer engagement, you are creating value, not extracting value. Give your customers something meaningful beyond a sales pitch.
A study by Hall and Partners states that up to 66% of your profits may rely on effective customer engagement.
More important than the price of your product or service. Everyone values reliability, it can be in the form of public transport running on time or when a serviceman turns up, reliability is important to meet your customers’ expectations.
Reliability can be in a number of forms: it can be in your service or physical product, whatever you sell, reliability is key.
A few things that make a reliable service:
- Manage Expectations – this goes back to the basics of business, if you tell your customers you are going to do something, then do it;
- Communicate appropriately – engaging people effectively shows others that you are reliable and will build trust in you and what you offer;
- Always finish what you start – don’t just start strong, but finish strong as well.
An important feature of many service offerings, your consumers recognize the greater risk associated with the purchase of services than with the purchase of goods.
Five reasons a guarantee helps you add value:
- Creates clear performance standards, that boost employee performance and morale;
- Pushes your entire company to focus on what your customers consider good service, not just what management assumes;
- Generates reliable data when your business performs poorly;
- Builds customer loyalty, sales and market share;
- Forces your business to examine the entire service-delivery for possible failure points.
Telling customers that your product or service saves time and money is not adding value. At the end of the day, your customers would love to save time and money, but how exactly can you do this?
How can you quantify this?
One way to do this is to look at the needs of your customers, what are they trying to get done? And what are their pains with getting this job or task done? And then what are their gains about getting this done?
When you understand this, ask your customers to rank their pains and their gains and you will start to uncover how your customers measure productivity.
Starting a business can often seem overwhelming and complicated. There are so many things you have to consider to start a business. One of those things is to understand the true benefits your customer gets from your product and sett the right price for that product. Once again awesome post!