Let’s face it, we’re a pretty cash strapped nation at the moment.
And, even when we are feeling flush, consumers tend to like to weigh up the perceived value of a product or service against an item’s actual price tag.
Of course, raising prices is the easiest way for a brand to quickly boost profits.
So, to that end, pricing tactics are given a lot of time and energy by marketers and cost analytics are extremely advanced in the business world
Perceived customer value is rather trickier to evaluate though. Not to mention far more complicated from a psychological perspective.
Business owners and marketers have to spend time and effort coming up with concepts to assess what end-users may consider valuable.
For example, do they want a specific product or service to save them time or money?
Or are they looking for something that will reduce their stress levels or provide them with entertainment?
Yes, a lot of it’s about choice analysis and research, but not all concepts of value are preconceived.
Consumers are well adept at coming up with new measures of worth, so brands have to pre-empt what people want to ensure they get the required emotive end-user experience.
Of course, as with beauty, value is in the eye of the beholder.
But it is possible for a brand to put together a meticulous consumer value model based on universal building blocks of worth.
And, if it’s done right, in the appropriate combinations, a business can be rewarded with stronger customer loyalty, sustained revenue growth and great consumer willingness to try something new.
Elements of value
In their most basic forms, elements of value are inwardly or outwardly focused.
The inwardly focused elements tend to address a user’s personal needs and focus on life-changing elements.
Outwardly focused ones help customers interact with and navigate the external world and deal with complexities.
They all fall into four principal categories: emotional, functional, life changing and social impact.
Of course, the relevance of the elements in each category is impacted by culture, demographics and industry.
For example, people in developing countries will have little time for something that evokes nostalgia. Instead, they are more likely to place value on something that makes them money, saves times or reduces effort.
The knock-on effect
So, can perceived value really be linked to the performance of a brand?
According to research, yes, it can.
Consumer loyalty was shown to be rifer amongst companies that delivered on multiple elements of value.
In addition, strong performance on multiple elements is also linked to higher and more sustainable revenue growth, as well as an increase in market share (Amazon being a case in point).
Just goes to show… more really is better!
But it’s still vital for a business to choose their elements wisely, especially as the critical elements vary from business to business.
Unless we’re talking about quality… that ticks the boxes from a consumer loyalty perspective across all industries.
Sensory appeal is a biggie in the food and drink industry. No real surprise there.
Banking sectors should focus more on access and heirloom, the latter because people want to plan for the future.
Mobile phones should be fun and help people make connections, as well as saving time and reducing effort.
Cost savings are of importance across all service brands.
Online businesses come out cream of the crop if they help customers save time and avoid hassles. Presumably because they make customer interactions easier and more convenient.
Yes, despite the growth of digital companies, bricks and mortar firms can still tick the boxes for attractiveness and belonging.
And, if their customer service levels are outstanding, they get even higher ratings:
After all, as we’ve said time and time again, it’s all about the emotive end-user experience.
Elements at work
If a business wants to set themselves apart from the competition and better meet customer needs, they need to improve on the elements that form their core value.
Adding new elements helps to improve the value proposition as does instilling the importance of hunting for value in employees.
Get it right and it’s possible to improve on service and value offering, thus increasing customer satisfaction and loyalty and aiding in competitive advantage.
Elements of value can also be used to identify what consumers see as a brand’s strengths and weaknesses.
To do so, a company needs to discover what’s important to the customer and then look at how they perform in relation to their competitors on these elements.
And it’s vitally important to improve on any underperforming elements before trying to introduce new ones.
When it comes to introducing new value elements, where should you start?
Quite simply, you need to listen
It’s the easiest way to know what end-users want and strive for. You need to understand consumer priorities, frustrations and compromises.
The elements of value work best when a business recognises them as a growth opportunity.
Value should be as much of a priority as customer loyalty, cost management and pricing.
It can work for new product development, pricing and customer segmentation.
Get it right and understand what your customers truly value and you’re well place to gain an industry edge.