Do you think enough about the value your offer to your customers? If not, you could be losing them. If you offer too much you could be throwing away valuable margin.
Usually though, offering too much isn’t a problem. Companies often fail to deliver enough value — their product doesn’t meet expectations, or their brand proposition is too weak, or their support or distribution is inferior. The price they pay is lost business.
Leigh Cowan from Launch Engineering says that can happen when finance people get too involved in the marketing process — they want to charge more, or they make cuts that devalue the proposition to the customer.
Nick Coster from Brainmates says the value has to be related to the price you charge. Customers want to feel like they’re getting a good deal, so they must perceive that the value is more than they are paying. Listen in to the podcast for an interesting example of how you can do this and increase revenue, without sacrificing margin.
Often companies will throw in extras to help improve the perceived value to the customer. That’s fine, so long as what you’re offering is something that’s wanted or needed. British journalist Martin Kelner describes how The Guardian gave away celebrity designed wrapping paper just before Christmas 2009 — as if the designs weren’t awful enough, it was printed on newsprint, too thin to wrap presents with. A totally useless add-on that satisfied no one.
Other companies work hard to create value in one part of the organisation, only to have it destroyed by another. Stephen Howard points to all those pesky add-on charges from your bank. They spend millions building their brand only to annoy us with small incidental fees that reduce our perceived value of their product offering.
That’s Tip 17 in our Top 40 Business Tips countdown, offer more value to your customer — to do that you need to understand what they want, have a handle on what they are prepared to pay, and look at what else you can do to get them to pay a little more, whilst still feeling like they got the better end of the deal.