What is value? How do you validate its worth to your customers? People’s perception of value varies. Your heirloom quilt that your great-great grandmother made is worth much more to you than it is to someone else. Consumers are much the same way, in that they’re simply not aware of the cost to produce the products they buy. Some other things that effect perceived value, also known as value in marketing, are emotional, social, and cultural factors.
If you only offer services, perceived value is even more important. Since you don’t have a tangible product for your customer to inspect and see the value, you will need to show how your services are irreplaceable by solving their problem and help fulfill their needs. The higher the perceived value, the more you can charge for your products and services, which can boost customer lifetime value, and can help improve conversion rates (i.e. if you’re charging $200 for something that is perceived as being worth $500, people may get more excited about the offer). Follow these strategies to show your customers the value in your products and services:
People love to get a bargain for a good product, but they don’t want something that is necessarily cheap. A cheap product may fall apart quickly, while a good bargain means it was simply less than what they expected. This is cost reframing. By using cost reframing, you alter how a customer looks at your product or service. Do you offer a service that may seem expensive to others? Explain to your customers the “why” of its price. Instead of being expensive, show that the value is in its exclusiveness. Tell them how you only offer your service to customers that are ready to take their business to the next level. Reframing your customer’s perspective on your product can go a long way to making a sale.
Researchers at Harvard Business School found that it really is better to give than receive. How does that effect your product’s value? By participating in charitable giving, you connect with your customer more than another company with a similar product and price. It’s sounds unbelievable, but 94% of consumers would switch brands to support a cause. Make sure that any cause you have affiliated with not only supports your company’s core values, but also your customer’s. Offering a portion of the proceeds of your product isn’t just doing good, but it’s doing good business.
How do you stand out from the rest? By creating an outstanding product or service, you will avoid a straight price comparison based shopping on a similar product or service. Customers will take the lower price every time if the two items appear similar in every way. How do you stand out in the crowd?
- Bundle products. Whether complimentary or not, offer services or products that provide extra value. Make sure the additional offerings make sense to the original service or product being sold.
- Take the focus off of the price. When dealing with higher priced items, focus on your customers return on investment instead of your products’ price. Also, if this is a service that your customer typically performs themselves, outline the time=money factor as well as time spent doing other and more enjoyable things, such as spending time with family and friends.
- Become an expert in your field. Position yourself as an expert and more trustworthy for your potential customers. Obtain licensing if possible. Write blog articles, not only on your site, but also as a guest blogger. Also, show proof of your expertise by including testimonials and reviews.
- Offer a rewards program. From smoothies to hair-cuts, people like using a rewards program because it offers them something in return for their continued loyalty.
- Offer a better and stronger guarantee. Money-back guarantees offer the customer piece of mind in purchasing. If a guarantee doesn’t fit your product or service, try offering a free trial.
- Create a better customer experience. Whether it is in the shopping, shipping, or return phase, create an experience that the customer wants to recommend to others. Be as hassle free as possible.
- Provide clear contact information. If there was a need for them to contact you, make it easily accessible. This creates trust between you and your potential customers.
A Button That Makes Noise?
Researchers at the University of Texas have discovered a way to increase perceived value of a product without changing the product at all by adding a button that makes noise. Volunteers were asked to fast for a minimum of four hours. Afterwards, they were asked what they would be willing to pay for general food items. Then, they were shown pictures, some of which requested the volunteer to push a button when they heard a noise. Later, they were asked to choose between two items they had viewed having equal value and overwhelmingly 60-65% chose the food associated with the button and noise. Finally, volunteers were asked if they would pay more for that item and most of them said they would. These effects lasted for two months after the experiment. Perhaps you have an eCommerce business or SaaS that could benefit from a button with noise.
Increasing perceived value isn’t just good for business; it’s crucial. Customers feel empowered knowing they’ve picked a brand that gives them extra satisfaction. They also are more loyal to brands they feel have a higher value. Do you have a tip for increasing perceived value? I’d love to hear from you in the comments below. Still not sure how to increase your product or service’s perceived value? Feel free to contact me; I’m happy to help.