A simplistic view of value in products and services is how much customers are paying. But we all know that not every customer is looking for the lowest price. Rather they are looking for the best price for the best product or service to fit their needs. If they get better service when buying something, a product that lasts a long time without problems, or very attentive customer service when they need it, these factors are often more important than the “sticker price” of what you are selling. The point of this discussion is customer value and how you get it.
Some people only shop for the lowest price because they value their money or are on an extremely tight budget. These folks need to “value” their money over the quality of what they are purchasing. Or they are not using an up to date bookkeeping system like QuickBooks to generate custom reports. If they were they would learn about the advantages of products and services of higher quality and how they save money and make more money in the end.
Customers who have a better understanding of value will always pay more for products that perform better, last longer, and don’t need to be constantly repaired. They will happily pay more for prompt and efficient services because these services save them time and add “value” to their lives and businesses.
You may hear the expression value for money, which tells you that the person will be shopping for the lowest price. Or you may hear money for value meaning that they want and need products or services that function efficiently and that, within reason, the price is not so important.
Other “definitions” include “the regard in which something is held” or the “usefulness, worth, or importance” of something. There are a whole host of synonyms that are useful when thinking about customer value and how to get it.
And, before you start thinking that this is an English grammar lesson, you need to be able to communicate with your customers in order to benefit the most from increasing the value of your products and services. “Selling points” for a product with a high price tag should include words like effective, efficient, cost-effective, and others. These are also the terms you should think of when considering customer value and how to get it!
Customer value is in the mind of the customer. It is their perception of the worth of your products and services versus those of your competitors. A customer will value what they buy from you when they believe that the benefits outweigh the costs.
Think in terms of this simple equation: CV=B-C or customer value equals benefits minus cost.
You could certainly make fantastic products or provide state of the art services in your business and sell them for very little. This would probably guarantee that you sell a lot of everything and that you would soon be out of business! On the other side of the coin, if you manufacture substandard products and give really poor service, all at a high price, this only works if you have no competitors. Otherwise, you will also soon be out of business as well.
As any business owner knows, the key to success is finding the ideal combination of quality and price. This results in the ideal customer value or how your customers perceive and value what you sell. To do this effectively you also need to track and manage your own costs, budgeting, and cash flow. At Exigo Business Solutions in the Kansas City area, we help our clients do this with the Profit First method. This approach provides a profit off the top twice a month, improves budgeting, and keeps you on top of cash flow.
All of this having been said, here are some practical ways to increase customer value.
Making a better widget and providing better service in fixing widgets are both good ways to increase customer value. This has to be done without increasing your price or increasing minimally. Ideally, you will absorb the costs of your improvements and generate more sales from satisfied customers. If the increased volume of sales is enough to increase your profits this may be enough. If you, you can also edge up prices later on when customers have come to see increased value in your improved products and services.
If you do not know what to improve, consider these thoughts.
All of these insights can be gained by following up after a sale.
There are several ways that you can always improve in this regard from providing help when selecting the appropriate products and services to speeding up delivery and fixing post-sale problems rapidly and with no fuss.
Always remember that your total value to your customers can be far more than the specific products and services that you sell. If you have a website, write a blog about what is new in your field, how one product or service is a better fit for a certain need than another is. As you come to be seen as an expert and reliable source of information this adds value even before the customer walks in the door!
Always remember that your customers are spending more than money to buy and use what you sell them. How much time to they spend finding the right product in your catalog. How rapidly does a salesperson return their phone call or email? Is the sales process efficient or do they have to spend a lot of time and effort getting what they want? And, once they pay you, how quickly is the product or service delivered and up and running?
Find ways to make it easy to deal with your company and you will greatly increase customer value!
Fine Tuning and Re targeting Your Products and Services
This gets back to listening to your customers and helping them solve their problems. It may be as simple as setting up automatic reordering of products that are consumed in a predictable manner. Or it may involve simple design changes in a product that you manufacture.
With recent changes in the law, online retailers now have to worry about use tax notices and reporting. Let us help you with this problem and how you manage it.
An important and too often forgotten part of reaching out to your customer base is marketing list maintenance and tune-ups. Routine updates are important.
Making a profit in a skilled trades business is often as simple as outsourcing to a different bookkeeper and change the way the books are being done.