What is Value?

I often point out to clients that value is not just about money. It’s about necessity. It’s about urgency. It’s about happiness. We all value different things.

Cadillac-CalaisI remember when I was a child, growing up in a lower-income neighborhood of Miami, learning this lesson. Many of my friends, whose family were on government assistance and struggling to make ends meet, had many of the so called “luxuries” my family could never imagine providing. New Jordans, gold chains, Cadillacs, big TVs, and more. The issue for many of these families was not whether or not they could afford it, but rather what they valued. Some lived in a run down house, but the feeling of driving down the block in a great big Cadillac (Diamond in the back, sunroof top, diggin’ the scene with a gangsta lean, gangsta whitewalls, TV antennas in the back) seemed to make them feel better. Some bought their groceries via food stamps, but doing so, wearing fresh Jordans, seemed to bring a sense of confidence they desired to “make it through” the situations they found themselves in. Keeping up with their impression of Mr. Jones was what was most important to them at that place in life.

Now, I’m not condoning this sort of behavior, however the lesson learned was, people will find a way to make things happen if it is important to them. In a down economy, it’s not necessarily money that changes what we buy, but value. Consumers may not buy what you’re selling simply because they don’t value it. Maybe they value family, rest, their home. Maybe they value luxuries that make them forget, even just a little, during hard times.

Here’s a little of what Seth Godin had to say about value:

Sometimes it means, “there isn’t enough money to pay for that.” Certainly, among the undeserved poor, this happens all the time. And for things like health care and education, tragically, it happens too often.

But most of the time (in the commercialized, wealthier part of the world that many of us live in), the things that are within the realm of possibility could be paid for (even the edge cases could, if we found friends and neighbors and went deep into debt). One person might say a stereo or a sizable charitable donation or a golf club membership is “too expensive” while someone else with the same income might happily pay for it. “It’s too expensive,” almost never means, “there isn’t enough money if I think it’s worth it.”

Social entrepreneurs are often chagrined to discover that low-income communities around the world that said their innovation was, “too expensive” figured out how to find the money to buy a cell phone instead. Even at the bottom of the pyramid, many people find a way to pay for the things they value.

The same is true for real estate, ad buys and productivity improvements in the b2b sector. If an investment is going to pay for itself, “it’s too expensive,” rarely means, “we can’t afford it.”

Often, it actually means, “it’s not worth it.” This is a totally different analysis, of course. Lots of things aren’t worth it, at least to you, right now. I think it’s safe to assume that when you hear a potential customer say, “it’s too expensive,” what you’re really hearing is something quite specific. A $400 bottle of water is too expensive to just about everyone, even to people with more than $500 in the bank. They have the cash, but they sure don’t want to spend it, not on something they think is worth less than it costs.

Not everyone will value your offering the same, so if you wait for no one to say, “it’s too expensive” before you go to market, you will never go to market. The challenge isn’t in pleasing everyone, it’s finding the few who see the value (and thus the bargain) in what’s on offer.

Culturally, we create boundaries for what something is worth. A pomegranate juice on the streets of Istanbul costs a dollar, and it’s delicious. The same juice in New York would be seen as a bargain for five times as much money. Clearly, we’re not discussing the ability to pay nor are we considering the absolute value of a glass of juice. No, it’s about our expectation of what people like us pay for something like that.

Start with a tribe or community that in fact does value what you do. And then do an ever better job of explaining and storytelling, increasing the perceived value instead of lowering the price. (Even better, actually increase the value delivered). When you don’t need everyone to buy what you sell, “it’s too expensive” from some is actually a useful reminder that you’ve priced this appropriately for the rest of your audience.

Over time, as influencers within a tribe embrace higher value (and higher price), then the culture starts to change. When people like us start to pay more for something like that, it becomes natural (and even urgent) for us to pay for it too.

In a down economy, marketers fret a lot about price. We think that since times are tough, people care about price and nothing but price.

Of course, people actually care more about value. They care about value more than they used to because they can’t afford to overpay, they don’t want to make a mistake with their money.

Value = benefit/price. That means that one way to make value go up is to lower price, right?

The thing is, there’s another way to make the value go up. Increase what you give. Increase quality and quantity and the inmeasurable pieces that bring confidence and joy to an interaction.

When all of your competitors are busy increasing value by cutting prices, you can actually increase market share by increasing value and raising benefits.

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