Value can be defined as the benefit or usefulness that a customer receives from a product or service in relation to the cost of obtaining it. The concept of value can be applied in many different contexts, but it is often used in the context of business and economics. In business, companies try to create value for their customers by offering products or services that meet their needs and exceed their expectations while keeping costs low.
Value can also be described as the worth or usefulness of an item, a service or an outcome. It can be a perceived or actual benefit or a quantitative measure, like a dollar value. In business, creating value for customers is a key goal. Companies aim to create products and services that customers find valuable, and they often use customer feedback and market research to understand what their customers value.
Value can also be described as the satisfaction received by the customer for the cost incurred. It also takes into account the customer’s perception of the product/service and the benefits that it offers. Understanding the value a customer perceives in a product/service is crucial to determining the pricing of a product/service and the marketing strategy.
The Foundation of Value
There are two main ideas underpinning Value that you must understand:
1) ECONOMIC VALUE: This could NOT be more important. It’s not about ROI as much as it is about economic Value. Please listen to the videos below to understand how to communicate economic Value to buyers. The concept of economic value underpins every conversation using the value map.
2) BUSINESS PROCESS: The other key concept in the value map is an end-to-end, streamlined and valuable set of business processes. These business processes are staffed, managed, measured, and executed by companies as services. For example, Airlines are services, and so are carriers. BECAUSE carriers (your clients) are ONLY providing services, services are ONLY defined as “productized processes” (end to end).
Value: Where Pipeline Comes From
VIDEO: The source of economic Value
Your understanding of Value determines your ability to sell. For example, consumers outside a company see a package arriving on time, and your buyers see the complex inter-connected “moving parts” of ensuring a package comes faster, cheaper, and undamaged.
The reason you must be able to communicate Value is simple. You must be able to illuminate what it takes to be better, faster, and cheaper than another option.
The IMPLICATION? If you are in sales and do not nail these two points as an outcome of your sales conversations, you will not be able to build your pipeline.
Value: Subjective and Objective
VIDEO: Subjective and Objective Value
Some people like rock music, and others like country. Some people prefer chocolate; others prefer strawberry. Economics calls Value subjective to reflect these different tastes and preferences. Philosophy uses the term “value” objectively to refer to things such as rights.
Value: Proposition
VIDEO: The Value Proposition Canvas
This video helps you think through how to design products and services that customers want. In this short video, we walk you through the tool and how it works.