One of the questions I am most often asked during sales training programs and executive coaching sessions is, “What is value?” The reason, is we all talk about value, adding value, value add…but very few of us really know how to define value or articulate it to customers.
Businesses and executive leaders are hungry to know the answer to this question. If you want to be confident in your price or your pitch, you must first be confident that the value you build is worth it.
Recently I was asked to do a sales training session on Value at San Diego Startup Week. Watch the short video here, where I demonstrate value using a watermelon!
What is Value?
I was reading an academic paper once when I came across the consultant’s definition of value. The simple formula is:
When weighing a potential purchase, customers must determine whether the value they receive exceeds the price of the product or service. Thus, price is not the determining factor, so much as value. The good news is that while there are sometimes price constraints, the value is limitless.
Instead of increasing sales by lowering the price, many businesses could benefit by simply raising their perceived value (this can be done by adding physical improvements to the product or service, or by simply learning to better articulate the value to their clients).
To give an example, imagine you were a customer looking to purchase an electric vehicle. You can purchase an economical model from one car company or a more expensive model from another. When weighing your buying decisions, you consider the amount of money you’ll save on fuel costs; benefits to the environment; social status, etc. All of these factors create a perceived “value” and factor into whether you purchase the more or less expensive option.
The next logical question, then, is how do we increase the benefit and thus the value?
The following tips will help you create and sell value and will improve your pitch.
Value is unique to every individual.
When speaking to the value of your product or service, it’s important to understand the difference between features vs. benefits. Features are the real-world attributes and facts about your product. Benefits are the elements that make up the value to your customer.
The features of a watermelon martini: it’s cold, sweet, contains alcohol and costs approximately $10.
The benefits: it creates a memorable experience with friends; it allows you to drink without tasting alcohol; it makes you feel kinda classy (well, at least for me it does); you get to go out to a nice place and have a nice night out.
Let’s focus on the experience piece. Most highly valued products and services create an experience that leaves a lasting impression with the customer. Again, your customers don’t buy your product because of its features; they buy it for the experience that it (or you) provides them.
What’s great about focusing on Benefits is that they are very flexible and vary greatly from person to person. When considering your Value Proposition, always consider the different benefits your product or service creates and how these can be interpreted differently from customer to customer and better conveyed to them.
Find out what your customer values and tailor the benefits to fit that need.
Create value by solving a pain point.
Almost everyone will pay you if you can make their life easier. Restaurants and fast food businesses know this. They make our lives easier by making it easier to eat dinner. They free up time in our busy schedule that would otherwise be used for prepping and cooking meals and allow us to reallocate that time towards other pursuits. In this case, the benefits (more time for work, family, etc.) outweigh the cost.
Create value by catering to your customer’s lifestyle.
Would you pay $500 for a blender? Many people do. Vitamix positioned themselves as the best possible solution for a healthy lifestyle. You might think these restaurant-grade blender owners are professional chefs. They’re often not. Why, then, would someone who is not a chef pay so much for a device they can purchase for $20?
Because it promises a lifestyle. Being a Vitamix owner isn’t just about owning an expensive blender. It’s about drinking organic smoothies. It’s about cooking and eating healthier family meals. It’s about going to the gym.
It’s about being the type of person who would own a Vitamix. Starbucks, Apple and Tesla are all good examples of companies that create a lifestyle component built around their product.
Create a product that promises a lifestyle your customer values and you’ll have a customer for life.
Create value by creating a great experience.
Whether you’re in the business of selling experiences directly (i.e. cruises) or simply want to deliver a better customer service experience, creating an incredible experience will increase the value of your offering.
I have a friend who’s been a member of an MMA gym for a year. He’s been three times. This friend continues paying for the membership because it makes him feel as though he is a part of the MMA lifestyle.
People buy to improve their future. People buy things that make them feel like they’ll have a better life. People buy for the person they want to be or the life they want to have.
Don’t speak to who your customer is today; speak to who they want themselves to become.