Since I got started in business many years ago, every business expert preached (and still preaches) this:
“It´s all about the value”.
Profits in your business are the result of the value you provide to your customers, but…
What is “VALUE” exactly?
And more importantly, How can you really know and even craft value to make more money?
In this post I want to provide a “Value-Scale” so you can better measure the value that is being provided at different levels of transactions.
Below you can see the highlights of each level of value given, and it can help you address how to add value to your customers, and maybe understand why your business remains at certain level of sales, since that is dependent on the value you provide.
On the “Anti Value” level you have scams, and I then present different levels all the way to “Life Changing Value”.
You can find more details for each category below the box, but have a glimpse to get a sense of the Value Scale:
|The Good||The Bad||The Ugly||The Beauty|
You give people a chance to pity you
|Disposable business model||Jail||
You´re the bad example so other business can learn
|One time customers turned into lifetime enemies||Need complex structure to see (short lived) profits||
|Low Value||Make people smile (Sort of)||Needs massive market to be profitable||No one really “loves” your product||
Honest and real business model
Fills human needs
|Anyone can be or turn your competitor||
Smarter work means little. It’s hard work and more hard work
Great for Business Learning Curve
|Average Value||Customer chooses you deliberately||Hard to keep your customers attention||Long Hours needed to stay in the game||Easy to Add Value and Scale Up|
|Good Value||You get to help others||Jungle of Competition||Subject to external factors such as the Economy||Shift from seller to problem solver|
|Remarkable Value||You solve other people problems uniquely||Depends on critical mass for profitability||You want everything and you want it now. Tough to say no||You put the terms, not your market or the economy|
|Life Changing Value||You transform peoples lives||Not everyone is ready nor can or will pay||Everyone thinks your success fell from Heaven||
You´re a self made celebrity
Keep in mind that the above table and the descriptions below are broad generalisations, mostly accurate, but simplified for explanatory purposes. But this does not mean that you “must” move on the value scale in order to have a successful business. A low or basic value product, can easily be more profitable if you understand your market and make your product better positioned. But no matter how hard you try, a toothbrush for example, will never have a life changing value on users (even if it makes you rich), Got it?
Here some additional descriptions:
- Anti-value: As stated before, this includes scams and rip offs. Not much description needed here, but I will still mention that if you want to be in business, avoid at all costs any activity that resembles this no matter how (If you don´t, it will bite you in the …). Price range is variable but this is always an experience customers never forget, for all the WRONG reasons.
- Non-value: This is what many cell phone and credit cards companies do on a regular basis. It´s hard to imitate them altogether even if trying, but it´s fairly easy to fall into “non-value practices”. For example if you increase price without increasing value, that is non-value. Although the price tag at this level is usually inexpensive on price, it’s proportionally ridiculous and annoying on the big picture. A memorable customer experience too, on the negative spectrum.
- Low Value: This is low cost items that people don´t really need, but they “somehow” add something. Think of candy, bubble gum or ice cream. Of course there can be profitability here (if you´re Kraft Foods or Hershey’s), but regardless of profit, this kind of value does not make the world a better place. The cheapest in price. At this level, customers get a fleeting experience and gratification.
- Basic Value: A notch up you get basic value, but this falls more in the line of things you actually need. You still do not enjoy buying them, but you have to. Think of razors, toothbrush or deodorant. Instant gratification is usually the result of this level and the pricing is cheap, therefore not really memorable. Perhaps habitual, but not memorable.
- Average Value: Here you start enjoying spending money, and the purchases made have the capacity to make your day. This may be a favorite restaurant or coffee shop, a good movie or any kind of treat. This provides short term gratification and regarding price is usually affordable.
- Good Value: This purchases make your life easier. Think of appliances, smart phones or a reliable car. Price starts becoming a limiting factor at this level. The experience is above average, with a fairly long lived experience, but not yet remarkable.
- Remarkable Value: This level makes your life better. Think of a fitness program, a higher end experience like an intensive seminar or a trip overseas. Price range is usually high and restrictive. But the experience allows or even triggers personal breakthroughs in someone’s life and sets the stage for new standards. Long lived effects.
- Life Changing Value: At this level, any purchase has a permanent impact on someone´s life. Price seems “absurdly high” for most, but for the consumers at this level, price is irrelevant. Only “the chosen ones” get to acknowledge and experience this level of value, delivered by the top performers of any industry. This levels creates a “Before and After” effect in someone’s life.
If you find your business or can clearly relate to a specific value level described above, you may want to study the next level and if it makes sense to your business, you could move up the scale -one level at a time.
Do not skip levels, as your product may be most profitable at any of the positive levels of the scale, but do keep in mind the qualities of all the upper levels so you can implement these at any level.
You can always add PERCEIVED value without really going into the hassle of transforming the whole structuring of your products or services, but I will teach you about that on part II.
For the time being, please share on the comments at what level of value your business is right now and how you could improve it.
Until the next time!