When developing and marketing your products and services, it’s important to keep value top of mind. Consider what your target market cares about the most and focus on delivering that to them. Implement value-creation strategies in your business so you can compel your prospects to become long-term customers.
What Is Value?
Value is the worth of a product or service. What a business sees as the value is not always the same as what the customer believes the value to be. When implementing value-creation strategies in your business, it’s critical to focus on what the customer values. For example, the business may see the product features as the real value of the product, while the customers may value the time the product helps them save.
The value of the product or service is not the same as the price, and it’s critical not to confuse the two. The price is what the customers pay for the product, while the value is what they receive. For example, if customers pay $10 for a sandwich and a soda at a local café, then $10 is the price of the products. The value they receive in return for that $10 is nutrition, energy and satisfaction.
While price and value are not the same, they are intrinsically related. What the customers perceive the value of the product to be is connected to the dollar amount they have to pay for it. For example, it’s unlikely that a customer would pay $100 for a sandwich and a soda because the value does not match the price.
The calculation for the perceived customer value is the benefits minus the cost. The benefits they receive include the product benefits and the improvement in their lives as a result of the product. The costs may be the monetary expense in addition to any time or effort they had to spend to attain the product. By focusing on the value, businesses can gain a competitive advantage.
This formula can be applied to different stakeholders within the business. For example, the value of working for the company may be the personal satisfaction the employees get in addition to the wages they receive. The costs they have to pay could be having to deal with a difficult manager. Similarly, shareholders would receive financial benefits while taking on risk for their investment.
Understanding What Your Target Market Values
Part of the business strategy when it comes to value creation should be conducting detailed target market research. In order to understand what your customers value, you have to know their demographic, geographic, psychographic and behavioral traits. This will help you understand what they care about the most. From there, you can deduce what they find of high value.
The main three categories of value are time, quality and price. Prospects usually care about all three aspects, but one stands out more than the others. By focusing on that key customer value proposition, you can entice prospects to make a purchase. For example, if your target market cares about saving time, then your messaging and promotional positioning should focus on how much more time they will get back in their day by using your product.
Keep in mind that what a customer values can change over time. Your target audience may start off by valuing quality above all else but may soon shift into caring more about price point. That’s why it’s critical to conduct research on your target market on a regular basis so you are up to date on what they value now. This next-level form of customer research enables businesses to innovate their value proposition to meet their customers’ needs.
Identifying Gaps in Your Offerings
Your company’s strategy on creating long-term value for your customers needs to involve understanding your weaknesses. What are the gaps in the value you are offering to your customers? Take a look at what competitors are offering in addition to focusing on what your customers value the most. Consider conducting a survey where you can ask customers what else they would like to see from your business.
Knowing where the gaps are will help you to develop additional customer value. For example, if a small business sells healthy dinners for busy parents that they can heat up after a long day at the office, a key value component is time saved. To add even more value, the business could offer to deliver the meals to the customers for free. This saves the customers additional time while providing them with the product they need.
If a prospect was thinking about ordering food from the small business but didn’t think he would have enough time to stop by the store and pick up the order before taking his kids to soccer practice, he may choose to not order. However, the extra value of the free delivery could push him into deciding to make the purchase.
Creating Incentive With Value
Creating value for customers is more than just a financial strategy to increase revenue; it’s a business strategy that focuses on meeting customer needs. Through strategic management, organizations can develop a business model that is profitable and provides the consumer with more value than any competitor can offer.
Value-creation strategies that can entice the prospect to make a purchase include:
- Segmenting your audience: Not everyone in your target market will value the same things. Find more success by segmenting your audience based on what they value and creating a tailored value proposition for that segment.
- Increasing the value/price ratio: Give your customers more than they expect for the price by throwing in high-value but low-cost items or services like free delivery.
- Making convenience a priority: Ease of purchase is a deciding factor for many consumers. Make your products and services available in many channels and accept different payment methods.
- Focusing on customer service: Prospects often make the decision to buy based on the service they receive. Make customer satisfaction a priority in your business and train your staff accordingly.
- Demonstrating the results: The value of the product is tied to the results the customer can achieve with it. Don’t dwell on the features; instead, focus on how the product helps the customers reach their goals.
- Using social proof: Convince consumers of the value of your offering by providing them with examples of happy customers. Use case studies and testimonials that speak to the value others have received from your product or service.
Refining Your Unique Value Proposition
Business owners and other senior management professionals with decision-making power need to focus not only on developing value but communicating that value effectively. The unique value proposition is how you can tell your prospects about the greatness of your product or service. It’s imperative to continue to revise and refine your value proposition as you learn more about what your target market values.
When working on your value proposition, drill down into who is part of your target market. Try to get as specific as possible so you can understand their needs. For example, “busy parents” can be clarified as “busy parents with children under 10 years old.” Include the specific value you offer your target market, like saving time or getting a higher-quality product depending on what is most important to them.
Speak to the results or solution your product offers, like more time back in their day, silky hair or a healthy diet. Be sure to discuss why your business is in a position to provide this value above your competition. For example, do you have a special process or use an exclusive ingredient? This is what helps the prospect decide to choose you over another business.
Anam Ahmed is a Toronto-based writer and editor with over a decade of experience helping small businesses and entrepreneurs reach new heights. She has experience ghostwriting and editing business books, especially those in the "For Dummies" series, in addition to writing and editing web content for the brand. Anam works as a marketing strategist and copywriter, collaborating with everyone from Fortune 500 companies to start-ups, lifestyle bloggers to professional athletes. As a small business owner herself, she is well-versed in what it takes to run and market a small business. Anam earned an M.A. from the University of Toronto and a B.A.H. from Queen's University. Learn more at www.anamahmed.ca.