The Many Facets of Value

Yes, I know, yet another [blog / email] about value.

I tend to go on about value a lot, but that’s because it’s one of the (often ignored) keys to optimising prices. If we understand the value we deliver, and we clearly communicate that value, then we can charge an appropriate price.

But that got me thinking - what does value mean to the customer? For clarity, when I say ‘customer’ I mean the person who is making the buying decision, which is usually the consumer of the product or service in a B2C context, but can be quite a different person in a B2B context.

Value is often assumed to just be the financial impact or benefit of the product or service, or the immediate utility derived from that product or service. For example, the money it might save, or the improvement in production output, or something like that.

But value, as perceived by the decision-maker, is a bit more complicated than that.

I look at it this way…

For any value proposition (the combination of the thing we do or provide, and the specific segments of customers we do it for), we would use this model to think about all the different ways in which value matters for the customer. We fill each relevant box with all the ‘items of value’ for that box. The purpose of the model is to help us think about more than just the financial impact of what we deliver.

In a B2C context, there are only two boxes, those in the ‘Personal’ column.

For example, imagine someone needs help with a divorce. That’s the service they are buying. There will be financial value that they are seeking - they want to maximise their share of any settlement. But there will probably be non-financial value too, ranging from maximising access to the children, making sure they get the dog, or feeling like they have punished the other party for whatever transgression led to the divorce.

Maybe they are buying a car. The financial value includes how good a deal they can get, or how much inside their budget they can stay, and the non-financial value includes how much they enjoy driving the car, or how they feel when they sit inside it (especially if it has a premium badge!).

In a B2B context, you might think there is again only one column, the ‘Company’ column. After all, the decision maker is buying on behalf of the company. There will be financial benefits (lower costs of production, increased output, lower staff turnover, improved efficiency, etc) and non-financial benefits (improved team moral, repositioning the company for a future strategic change, the admiration of others in your industry, etc).

But the person making the decision is also motivated by their own self-interests, whether consciously or (mostly) unconsciously, so the ‘Personal’ column is also relevant. If they are a professional buyer and not the person who will use the new product or service, then financial benefits might be the size of bonus they can earn from the savings made; non-financial benefits might be securing a promotion because their decision had such a positive impact on the company, or enjoying the feeling of admiration from their peers and bosses for doing such a great job, or feelings of security from reducing risk (by buying on quality and not lowest price) which avoids adverse career outcomes.

When we are thinking about the value we deliver, whether because we are rewriting the website, preparing a pitch to a new client, or designing new sales literature, we should always think about all the different ways that value is perceived by the decision maker.