What do your customers value?
This is the question I asked a group of small business owners at a workshop this week. Essentially, if someone tells you that they can’t afford your product or services, or simply aren’t prepared to pay your rates, in most cases, it’s got nothing to do with your pricing. It’s about perceived value.
In other words, if you take a look at my pricing and think, ‘she’s having a laugh!’ then it means that I have failed to communicate the value I can deliver to you. It could also mean that you’re not my ideal customer and never will be - and so I let it go - you cannot win the hearts of minds of everyone.
As you can imagine, this sparked quite a lot of debate. We had a lady who sold a ‘standard package’ of services, but who had different pricing based on how much she thought you could afford. (And we did quiz her to be sure she is delivering the exact same thing at all price points - which she is).
“Hmmm, so essentially you are means testing your potential clients…” someone piped up. Now imagine if you are someone she thought could afford a big price tag, and you happened to run into someone who was considered too poor to pay the full price, how would you feel? Obviously, I can’t answer for you, but if it were me, I’d be feeling a bit miffed.
There are a few things to pull out of this.
1. It’s not your business to decide what people can and can’t afford.
Consumers purchase based on the value they think they are going to get. They also set their priorities based on what they personally value. So for example, if you’ve ever seen that programme ‘My Big Fat Gypsy Wedding’, you have a group of people who will spend hundreds of thousands of pounds on a wedding, but don’t have a proper house to live in. That community of people values the ritual and sanctity of a wedding more than they value permanent bricks and mortar. That’s what they like, so their personal and community values are very clear and no-one else has the right to judge. If you are offering something people really value, they will find a way to pay for it if they want it enough.
2. Things that you value, and the things your customers value are not necessarily the same thing
In one of the Facebook business groups I’m a member of, the owner of a bridal dress business was bemoaning the fact that a bride-to-be asked her to create some bridesmaids dresses for under £200 each. The dress designer was livid to be asked to create these dresses for such a low price when she knew for a fact that the bride in question had commissioned a photographer that charges £10,000 for the full wedding package.
All that’s really happening in this scenario is that the bride has prioritised her wedding budget according to her values. A bridesmaid’s dress is going to be worn once and will then be hidden at the back of a cupboard for a few years until it’s eventually donated to a charity shop. The wedding pictures will last a lifetime. Someone else would have an entirely different point of view.
3. The more you understand what your customer values, the easier it is to sell to them
Which inevitably comes back that old marketing chestnut, understanding and profiling your target customers. Things like age, geography, income level, postcode etc. are no longer enough for targeting the right people. You need to dig deeper to understand what their values and priorities are. For a more detailed explanation of this see my article on marketing to the over 50s market.
The Elements of Value
To give you a bit more insight into this, you might be interested in a marketing concept that was recently developed by a respected management consulting company called Bains & Co who identified 30 elements of value that are important in the purchasing decisions of modern consumers.
They range from functional things like saving time, through to emotional values such as, nostalgia, life-changing values such as providing hope, and finally values that could save the world such as an alternative to plastic or fossil fuels.
The article in the Harvard Business Review (which you can read here), says that by taking the time to understand what your customers value, you can set about adapting your offering or communicating a set of values about your business that match their expectations. They’ve identified set of 30 fundamental values and have presented them in a pyramid graphic, and the idea is to think about what consumer values your brand/product/service can satisfy. Apparently, Amazon hits 7 out of the 30.
Once you’ve done that, think about how you can communicate those values better in your content, social media - and indeed every touchpoint where someone comes into to contact with your business.
Let me know how you get on.