Understanding what customers value

value concept on blackboard

Value is the name of the game in any market, but how do you
define it? You might say, “That’s simple! A customer that
values a good smelling home places value in a candle.” While
that’s true, it’s only a small fraction of the equation.�

Put yourself in the shoes of that customer for a moment. If 20
companies are trying to sell you candles, what makes one more valuable than the next? This
concept is one that puzzles even the best businesses and marketers.
Here’s how you can better understand customer value and build
success in your market. 

Defining Value

In the business world, value equals worth. Heading back to the
candle example, how much worth does a potential buyer place in any
given candle? Whatever product or service you’re selling, you
have to decide why making a purchase is worthwhile to the
consumer. 

While a candle will certainly make the buyer’s home smell
better, there are other values at play that can derive a higher
worth. Each of these values is what the customer gets in exchange
for the price they pay. In this example, those would include:

  • How long the candle burns
  • What scents are available to choose from
  • Chemical-free/organic ingredients
  • The size or shape of the candle
  • Color and the decorative nature of the container

All of these add value to the product, and that value does not
change for the consumer. What does change is the price. Raising or
lowering the cost only changes the buyer’s incentive to take you
up on your market offering. So, the challenge is to ensure the cost
to the consumer does not exceed the product’s value. 

Customer Value Models

Since each potential customer places a different level of value
on any given item, including candles, it can be difficult to tell
where that value lies. The best approach is a field value
assessment, but that’s rarely a possibility. Luckily, there are
plenty of other tools at your disposal. 

You could utilize direct and indirect survey questions, gaining
valuable insight into where customers place worth. There’s also
conjoint analysis and focus groups to better understand the
perception of your product’s functionality and performance. 

While all of the above can help you determine worth and adjust
price accordingly, you also live in the modern age. The internet is
ripe with customer value management tools that
can help you make better use of your surveys and assessments while
organizing the information you need in an easier-to-understand
way. 

These tools can also provide better insights, allowing you to
leverage that information throughout your organization as you
empower everyone from product managers to your sales teams and
value engineers. Several also offer case study builders, which are
an excellent way to boost value and therefore increase shelf
price. 

The Bottom Line

Value is relative, but it exists in the minds of every consumer
within your market. By understanding and building worth within your
product, as well as creating customer value models, you can
determine the best price-to-value ratio. While it is a complex
science, there are tools to help you pave a clear path to
victory. 

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Understanding what customers value