When it comes to your products or services, do you know what sort of value you are offering your customers?
If you’ve placed your chips in the ‘best value’ arena, a very competitive price will have a starring role in your value proposition. Your customers are likely to be very sensitive on how much they spend, and want the absolute best deal on offer. As a business proposition, this works well if you’re:
- Large enough to deliver ‘economies of scale’ so your price is keener than anyone else in the marketplace. In the UK, Weatherspoons Pubs is one of the best examples of a business offering a better price on a pint than practically any other pub chain.
- You’re one of the first to market and can offer best value at this point in time.
Option A can be sustained if you’re a big player with deep pockets. But Option B immediately loses its advantage as soon as new competitors come in offering a cheaper price.
And of course, there will always be rival businesses who undercut you on price, even if their numbers don’t stack up. Eventually, they will hit the wall, or hobble along until they think of another strategy. In the meantime, the customer falls prey to their lower price offer.
So unless you’re bigger, faster or unfortunately stupider than everyone else, then ‘best value’ is not a proposition to be recommended.
For most smaller businesses, an ‘added value’ approach is likely to win more favour with potential customers.
Value can be added in a number of ways, but here are some of the main options you can consider when building your ‘added value’ proposition.
Focus on quality, for example the source and content of your ingredients or the levels you go to deliver a higher quality customer service.
Build ‘added value’ experiences around your service or product that connect with your customer at a more emotional level.
Promote what you stand for as a business. Highlight your values and ethics to get added buy-in.
Consider how you can develop better relationships with your customers. How do your management and team connect with your customers? What aspects of their behaviour or approach makes an impact. For example, are your team fun to be with, or ‘lifesavers’ in a difficult situation?
Whatever your ‘added value’ approach, make sure you clearly communicate it and help customers better understand what makes you special.