Success Determined by Bringing Value to Your Customers
The new norm that we keep hearing about creates a marketing proposition for business that is not new but as an owner you need to understand that it is about “VALUE.” Unfortunately, most business owners think “value to the consumer” means a lower price; this misperception of value is costing businesses everyday. In this market, if you do not understand the term value and its relationship to your customer, you will most likely end up out of business.
Lowering your price for the sake of a perceived value to the end customer only creates long-term damage to your brand. Today’s customer is not an emotional buyer; instead they are rapidly becoming a sophisticated and knowledgeable buyer. There used to be a time when you could create buyers by using sex appeal and glamour, keeping up with the Joneses, offering promotional discounts on inferior products, or basically working on the emotional desires of people. Do not misunderstand, these concepts will still create a temporary market reaction, but the consumers today are seeking true value.
The first thing you must grasp is the difference between the models of “value IN” and “value OUT.” Many businesses/industries have been operating from a position of “value in” for quite some time. This philosophy means that in the customer-to-business relationship the business is looking to the customer to determine what “value” the customer brings to the business; usually this is in the form of profit or sales. If you look closely at the financial sector or the car industry, they have been operating under a “value in” philosophy for so long that they cannot break the cycle. Both have been motivated by the philosophy that a sale of any kind is good instead of focusing on what the customer really needs.
A “value out” philosophy means that the business is focused on what value they bring to the customer. The business will sacrifice just about anything for the sake of value to the client. The long-term reward for this philosophy is a sustainable business that is vibrant and healthy.
Why don’t companies participate more in the “value out” model if it has so much success? The philosophy looks in the short-term like it costs you profit. It looks a whole lot like “hard work.” It means putting the customer first instead of your needs, and inherently that goes against human nature.
True value encompasses many things: will the product or service actually work, is the price competitive, what is the durability of the product, and most importantly customer service. Only wisdom knows that the lack of value creates harder work and costs you more money. A “value out” philosophy is a cultural attitude within the employees and it starts with the CEO. You have to be careful and not blame your employees for something you are unwilling to do yourself.
During these type of times, companies will cut back on the quality of their product to increase profit margins, they cut back on marketing expenditures creating a weakness in market perception, perform short cuts and cutbacks all promoting a lack of value and beginning the process of a “value in” philosophy.
A “value out” philosophy takes a strong commitment to the small things. The accumulation of doing the small things right long enough will create long-term success. I once heard a statement: “If you don’t think small things matter, spend the night with a mosquito in your bedroom.”
The deepest and most costly cut is in the value to your customer. When you cut that, you cut out the heart of your business and unfortunately once you realize it, it’s oftentimes too late. Just like with your own personal values, once compromised the damage is done, and the genie is hard to put back in the bottle.