Everyone wants a bargain, even you. But think back to the last time you went shopping for something important, or where quality mattered. You probably looked for the best price, didn’t you? Then you looked at other models or versions that would do the same job. Eventually, you may have even settled on something slightly (or a lot!) more expensive. Why? Because of value. There was something about that other version you eventually bought, that you valued more than low price. Low price is, and always has been, a race to the bottom. If you compete only on price, and not on value, someone will provide a solution that costs less than yours.
So what to do? In our 5×5 Sharper Focus Business challenge, we prompt participants to think about one strategic question every day, like what is the value you deliver, that will ensure your client or customer is willing to pay more for what it is that you sell? Bain and company studied the elements of value, to take the guesswork out of it. They found there was a pyramid of value, much like Maslow’s Hierarchy of Needs. Customers want value in one of four areas:
- Functional value, like reducing effort, or avoiding hassle
- Emotional value, such as reducing anxiety or creating fun
- Life-changing value, as in giving hope, or providing motivation
- Social impact, or helping them to achieve a purpose greater than themselves
How can you keep your customers out of the basement of low expectations, and help them up the value pyramid today?
