As Warren Buffet says, “Price is what you pay; value is what you get”.

Reading this article will tell you how you can improve your value position Instead of customers only being concerned with price. You do this ensuring they experience value with the experience they have when they purchase the product or service you provide.

Most people price their products and services relative to the dollar value and this is likely based on what the market suggests.

Value Proposition

However if a value proposition is a comparison of the benefits offered by a business’s products and services to the price it asks customers to pay, value is no longer limited by what the market suggests, it is all about the quality you provide.

My point is how your customers perceive value is more based on the experience they get when purchasing and using the product or service they have paid for rather than the price they paid.

For example, I used to always take a taxi to the airport. I used a taxi fleet, which meant I always had the same driver, he knew me, he called me by my name and he always charged me the same price.

When UBER launched and people were raving about their service and sharing their experience, I got interested and checked them out, what I noticed was that they were 30% cheaper than my taxi fleet.

A savings of 30% on price was my tipping point, don’t misunderstand this post, price always plays a part even if the experience is great, but there is a tipping point in this example it was 30%. I left my taxi fleet and moved to UBER.

After a few trips I booked a ride during peak time. What I hadn’t been made aware of was that UBER added a surcharge to their pricing during peak times.

I tracked this surcharge during peak times and saw that every trip was charged differently, I no-longer knew what the final charge would be at these times and in most cases, I was charged more than I had been paying with my taxi fleet.

It took my experience with UBER to appreciate the value my taxi fleet provided me; consistency. I want to know what I am paying before the trip not find out with surge pricing it is double.

How Do You Know Your Value Is Perceived By Your Customers?

You need to ask them. Implement your Customer loyalty research program, your customers will tell you unprompted, what they want and how they want you to provide it.

An article I have written previously 10 Actions to Implement A Customer Loyalty Research Program will guide you through the steps and tell you why it is important to talk to your customers.

Example 1

One of our specialist clients was once considered to be one of the most expensive retailers in their industry. When we researched their customers the data showed that their customers had no relationship between the quality of the products, the value they represented and the price they were asking their customers to pay.

Researching their customers provided an opportunity to recreate the way they represented their value position.

Experience + Quality = Value = Low Price Conversation

And they designed a statement that simply said, Australian Made is better quality.

They chose words to reinforce the value by highlighting the quality of their products.

I remember walking around one of their stores listening to the sales team and in every conversation I heard each and every one of them using this statement at a relevant point in the conversation with the customer and done with pride.

What they had done, was create a feeling that their team and customers could relate to, it resonated with the customers values and reinforced the quality and price.

Customer loyalty research shows that when we provide our customers with a quality service and an excellent experience by demonstrating best practice, price is not a negative conversation.

Example 2

Let’s look at an example of a company that sells diesel engines which are the most expensive in the market. The customers who are loyal to them give the reasons why they are loyal, what’s surprising is very little of their conversation is about product.

They talked about how prompt and efficient the service was; how helpful the people were; how good the communication was; how much they like the product; the knowledge and expertise of the people who engaged them through the buying process; and how friendly they were. This is where they perceived the value to be.

Below is a 1 page guide that this company reads and acts on every day to ensure they provide value to their customers:

A high level of customer experience equals a feeling of value which means a low price conversation.

What’s The Value You Offer?

In a previous article Good Profit VS Bad Profit, I referenced Dr Stephen Coveys’ Emotional Bank Account where he explains the concept of an Emotional Bank Account with a metaphor “By proactively doing things that build trust in a relationship, one makes deposits” and he says “even the most loyal person will go once the withdrawals build up, especially when the deposits don’t”.

This is true to all parts of our lives, including our business.

Bad profits are those profits that might increase revenue but at the expense of the customer experience.

Value

Experience + Quality = Value = Low Price Conversation

If your value position looks like the image below, you will find that your customers are talking about price a lot because the value they receive and the price they pay seem to be uneven to them.

If your value position looks like the image below, you will find that your customers are talking about price a lot because the value they receive and the price they pay seem to be even to them.

This does not show they experience a high level of value and they will be talking about price being too expensive.

If they were to recommend your business they will be saying “yes it is good but it is quite expensive”.

However, if we can tip the scales as shown in the image below so that value is perceived as way higher they will hardly be mentioning price and that is what we saw in this company.

When your customers experience a high level of value, you can count on them to recommend your business because of the value they receive and they will be saying “It’s worth every cent’, “It’s really fantastic”.

As shown by our client when they needed to sell what made the difference, why their engines were more expensive:

They chose to own it, unapologetically.

When prospective customers told them their engines were expensive, they would reply saying, YES they are and told them why.

Their salespeople brought the value of their engines into every conversation. The power ratio, fuel reduction, reduction in maintenance and the fact that the engines are German made.

Experience + Quality = Value = Low Price Conversation

Give Value At A Price People Can Pay

When we work with our hospitality clients we promise that we will increase their average spend by $2. Why because we know that this increase will pay for our program and we know through customer research that an excellent customer experience increases revenue.

Working with one specific restaurant who at the time of contracting us had an average sale of $28.

Whilst working with them we noticed that the restaurant was catering to the market but did not offer any wow-factor as a point of difference.

We introduced a steak platter for 2, it included 5 different types of steak, Wagyu and other high end steaks, it was a big sized serving, cooked to perfection, presented beautifully and we valued this platter at $100.

Not one team member thought it would sell. We crafted a conversation to introduce this platter to every customer by the wait staff that invited them to try it. This platter was a huge success and became their signature dish.

By introducing this platter, we increase not only word of mouth recommendations – customers were actively talking about this dish and recommending the restaurant, we raised the restaurants average sale by $25 per head.

They also introduced another option to their customers, Grange by the glass rather than selling by the bottle and introduced a machine which would dispense a shot glass taste  of Grange bringing the price to a place that was affordable and one that their customers saw as great value and an opportunity to taste a high-end wine that would usually be out of their reach.

My point is to create perceived value at a price your customers can pay!

What products or services can you apply these types of examples to, leverage and introduce to your customers and have fun doing so?