I just read an article at Harvard Business Review called Business Marketing: Understanding What Customers Value.
Here’s a quote from the article (which you can read here if you’re not doing anything else for the next half hour):
Values and Prices are the value and price of the supplier’s market offering, and Valuea and Pricea are the value and price of the next best alternative. The difference between value and price equals the customer’s incentive to purchase. Simply put, the equation conveys that the customer’s incentive to purchase a supplier’s offering must exceed its incentive to pursue the next best alternative.
So that’s one way of looking at value as a concept, and that’s what you learn when getting an MBA. Lots of jargon, circular reasoning, equations, talk of perceptions vs observations, etc.
I prefer an alternative set of definitions. Let’s simplify this down and bring it into our industry.
Value is over-delivering on benefits. Two wines cost the same but one wholesaler makes it easier to get, easier to pay for, and a more friendly interaction with the delivery driver. Boom! Done! I’ll take that one, please.
Value is embracing customer service as the highest priority. Two wines cost the same, but one comes with a sales rep that is looking out for opportunities that will directly benefit the account, reacts when needed, and keeps their wines looking great on the shelf. Yes, ship it!
Value is justification of price, not lowering of price. Two wines cost the same but aren’t selling well. One wholesaler funds a two dollar per bottle discount to “help move it out.” The other volunteers to train the staff and do an in store tasting to prove to the consumers how good it is, while building momentum for the brand in the process. Yes, send in more, please!
Value can be created and curated, and can’t easily be quantified. This is the key, and this is why talking about creating value should not include too many numbers (don’t let the value conversation fall into pricing).
Value is about emotional satisfaction, not formulas.