Yesterday we talked about customer expectation and thanks to everyone for all the positive comments. Today I want to focus on identifying where the value is to your customers.
To give you a quick example, a few years ago we did a project for an online wealth management system where the vendor thought that being online was the real value to customers. The market on the other hand listed two or three other areas where it felt the real value was, having assumed it would be online.
So why is this important?
Well there are a few, but for the purpose of customer value, understanding where the market sees value is in our experience the primary data you would use to define price and profit from your products.
This comes down to market knowledge, but going back to the example I gave above, if that particular vendor had tried to sell its system with all the focus on the ‘online’ part, it would never have been able to charge enough to profit adequately. On the other hand by focusing on the areas where the market perceived value, the company was able to hold price higher and attract both customers and routes to market it would not otherwise have been able to. A good result all round.
This is not something you can read up on, or get by checking out the competition. Its also not something we would recommend you get someone else to do for you. Understanding where the real value in your market is can only come from asking it directly. I can almost guarantee you’ll be surprised by what you find and how much more you can charge for your products and services while still delivering value to your customers – good news for shareholder value too!
As always I hope this high level introduction to a way of thinking about value helps and I would love to hear about your experiences.
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