If I offered to sell you a bottle of water, you might be
willing to pay $1.00. It’s hardly worth
more since you have so many options and opportunities to replace my bottle with
one on a store shelf. But that same bottle, when offered to you in the dessert,
while you are lost might be worth $1,000,000 since it could keep you alive. Same bottle, different context.
Context matters when analyzing value.
The price you are willing to pay might shift based on
substitutions available or the story you tell me about where that water came
from and what benefits I may derive from quenching my thirst with it. This is a
basic idea in economics.
But how often do you examine the price you charge for your
product within the context of the value that your customer assigns to it? And what exactly is the anchor reference point
for the price that is charged?
If I drink coffee at Starbucks, I might pay $4.00 for my
drink. When I buy a Keurig cup for $1.00 per drink, my anchor price reference
is Starbucks (not what it might cost if I ground the beans myself).
Understanding your customer reference point for a price point, helps enormously
to see how they view the value of an offering.
Marketing has to help craft the right story to your
prospects to make sure your message is getting through. Here are eight questions
marketers like to understand to help them craft the right message:
- WHAT DO THEY VALUE: How well do you understand what your customer really values
when they buy products (or services) in your category? What is it based on and
are you clear about how the customer prioritizes the desired outcomes they
need?
- DOES RELIABILITY COUNT: How much value do they place on reliability of delivery?
- WHICH FEATURES: How clear are you about the features that customers
prioritize in their needs? You might have too many bells & whistle attached
when something simpler and less expensive is more in demand. Conversely, you
might be leaving money on the table when customers aren’t buying for function
but for fashion.
- SHAPING DOUBTS: If a competitor comes in with a similar product with
identical features, can you help shape a doubt or question in the customer’s
mind about buying from your competition? Can you highlight any truthful and measurable weaknesses that may raise a concern when a decision is about to be made?
- ADDED VALUES UNLOCKED: Is there value you add that isn’t obvious or clear to the
person making that decision? For example, if your product is American made and
your competitor comes from overseas, can you play upon patriotism or keeping
jobs in America?
- VALUE ALIGNMENT: Does your company’s commitment to a value that aligns with
your customer’s enough of a benefit to push someone in your direction. All
things being equal, would you rather buy from a company who puts sustainability
at the top of their values versus one that doesn’t care about that issue?
- SHOW DON'T TELL: Do you provide a clear way to physically show the difference
versus just telling someone why you are better, cheaper or faster? Some product
differences are complicated to explain – even to someone who is technically
interested. Show the difference, don’t
tell -it is powerful way to illustrate value.
- AN IRRATIONAL CHOICE: Emotional and irrational decisions occur all the time in
buying situations. Is it possible that you have been focusing on overly
rational explanations versus helping the customer through their journey to get
to a new emotional state. (Buy from me and you will feel safe, happy or proud).
Most sales people do best when marketing can help provide a
simple story to tell that connects with a buyer’s value. In order to be
successful, marketing folks need to be deeply immersed in understanding the category's dynamics so they can craft a message to unlock the value in your offering.
As a marketing professional, how have you unlocked value and communicated that message?
This post was inspired by an interview on John Jantsch's podcast with Ron Baker. To listen, click here.
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Need some help unlocking the value in your brand. Click over to Clarity to set up time for us to find the key.
Labels: context matters, customer value, Marketing Moments, pricing strategies, small business pricing, storytelling, unlocking value
