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Creating, by George Torok
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Deliver
value that your customers recognize, appreciate and reward. If you want your
customers to value what you offer - you must demonstrate that you value
them.
Value
implies trust so start by building trust. Always under-promise and
over-deliver. Be known for keeping your promise and then some. Be honest.
Never promise what you cannot deliver.
Don't
confuse value with cost. A product's value is almost never equal to its
cost. For example, your product might cost you $2 and you sell it for $10.
The value to you is $10. The value to the customer will usually be more than
the selling price. If it was only worth $10 to the customer then they have
no motivation to buy. But if the value to them is greater than the selling
price, they are motivated to trade their money for something of greater
value. It may be worth $25 to the customer. Then they will gladly give up
$10 of their money for the product. The more that value exceeds the cost of
the purchase, the more the customer will want to buy from you. Always offer
value that is greater than the price they pay.
Your challenge is to ensure the customer sees much more value than
their cost.
The
Value Formula
How
can value be so different from cost? Examine the following formula, then
discover where you can concentrate your efforts to enhance value.
Total
value = real value + perceived value
Let's
take it apart to understand it. Real value comprises the tangibles. It is
relatively easy to measure. Real value can be expressed in this manner:
Real
value = function/cost
Function
is what the product or service does in mechanical or analytical terms.
Imagine you are buying a new car. If you were shopping for the best real
value, you would get the most function efficient ground transportation for
the lowest cost. You could measure the car's function factor by comparing it
with the cost of your practical alternatives; public transit, car-pooling,
taxi, bicycle, limousine, various car models. You might wish to consider the
costs of these alternatives in terms of time and inconvenience. What does
your new car give you that these other modes of transportation don't?
Having
determined the new car's function factor, you can divide it by its cost. Is
its function worth more to you than its cost? If so, the new car has real
value. At the end of your analysis you would buy the cheapest car. Not
necessarily. Remember that what you are willing to pay for your car is based
on the total value to you, which is a factor of both real and perceived
value. So, sometimes without realizing it, you assign value to less
quantifiable benefits and buy something that you like. Liking is not part of
real value it is part of a product's perceived value.
Perceived
Value = belief x emotion
Compared
with real value, perceived value is more difficult to measure directly. Yet
it can have greater impact on total value. Perceived value is the product of
belief times emotion. It is influenced by intangibles such as image,
credibility, beauty and feelings - all the benefits you should emphasize in
your marketing efforts. Emphasizing your perceived value is the surest way
to differentiate yourself from the competition - and gain you more profit.
Perceived value is what makes a brand name more valuable than a no-name.
Nike is one example of a company that built a fortune on perceived value. As
individuals we think differently, perceive differently, and place different
values on things. Beware of that. Use it to your advantage. When your
prospect wants to negotiate price, remember to build up your product's
perceived value.
How
can you enhance the value of what you sell? If you are only looking at the
cost of paper and ink then you are forcing yourself to compete in the
commodity game. Instead find ways to emphasize the value of the your
relationship, the creative, - the intangibles.
Always
deliver real value too but compete on the perceived value.
George Torok, co-author
of "Secrets of Power Marketing: Promote Brand You",
ExpertMagazine.com
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