Creating value in your products
5 March 2009,
THE most frustrating business to be in must be one that sells the same thing as everybody else.
They end up competing on discounts and promotions and shaving margins just to survive.
Unless they have some unique cheap source of supply or significant economies of scale, they are destined to struggle to survive. Yet, even in most commodity markets, there are lots of things you can do to create additional value for your customers and thus increase your profitability and resilience.
If you simply think of a product from a utility point of view, you miss much of the value creation possibilities. Just think back to when you picked something out in a store and couldn’t find anyone to assist you to pay for it. Remember when you wanted a specific item of kitchen equipment and couldn’t track down who sold it.
Or perhaps, you have had some frustration working your way through the maze of options in buying a mobile phone plan. The fact is, buying and using are more complex activities than just solving a specific need. Buying and using are processes which create an experience for the customer. You create value by making that entire process a more interesting, productive and stress free experience, even if you sell a commodity product or service.
The majority of businesses simply do not understand the buying experience. If it was better understood, we wouldn’t be so annoyed during many of our buying decisions.
There is a vast consumer base out there desperate to find a business that understands what they are going through as they struggle to find a solution to problems which don’t use up so much time, is enjoyable and actually fixes the problem. The business which provides good accessible information to assist with choice and evaluation, has good availability, doesn’t waste your time when you want answers or want to buy, helps you with good user instructions and then looks after you later on with efficient help desk and maintenance support is going to do very well and can charge higher prices as a result.
Creating greater customer value is really simple. All you need to do is start listening to your prospects and customers. What works for them and what don’t they like? Why do they buy from you or from your competitors? What would make their life easier to buy and use? How do you make the search, evaluation and buying experience more productive, interesting and stress free? Be proactive – go out and find out how you can do better from the people who decide your fate - the customer.
Think of customer value and a series of components of which you get to choose and place emphasis on any number. What separates you from your competition? Where can you make a difference which moves you out of the ‘also ran’ to ‘leader’? All it needs is a little imagination and some determination.
Entrepreneur, consultant, educator and author Dr Tom McKaskill has established a reputation as one of the world’s leading authorities on exit strategies for high growth enterprises.