5 Powerful Ways to Boost Customer Value – What every Small Business Owner must implement
Updated: Jul 30, 2020
If you think of fast food joints, restaurants, dry cleaning services, bakery, fitness centers, spa & salon, travel services’ company, civil contractors, consultants, food processing businesses, PR agencies and similar small businesses – most of them are alike in their offering and highly competitive.
How will you compete and carve your market share?
How will you convince them that your product value is superior?
You can persuade your customer by managing their perception of value in relation to price they pay.
Customer value is the worth of your product or service perceived by your prospects and customers in comparison to your competitors’.
Simply stated, it means customer is satisfied when they perceive that they are getting more value than the price they are paying for the product or service.
Source: Screenshot from YouTube Video on Creating Customer Value by Nils de Witte
But before you jump forward to emphasize on customer value, you must be aware of the characteristics of your product category, features of your target market, customer profile, frequency of usage of the product and the level of involvement of your buyer in the buying process.
This brings us to a fundamental step.
You must know who is your customer? What are their concerns and quirks, what pleases them? What is their quest and how do they decide to buy your product?
In one line, you must know your customers inside out better than they know themselves. But here’s another thing (just stay with me, we will get through this, I promise):
Do you know who are your buyer and consumer?
Are they the same person or different?
Once you know these basics, you can go about focusing on value to influence your prospects and customers.
Customer value is a key driver of sales, profitability and expansion of market share. We must focus on enhancing customer experience to satisfy existing customers which will lead to repeat sales and higher contribution.
Bain & Company research has found that
“A 5% increase in customer retention correlates with at least a 25% increase in profit.”
It is cheaper than trying to convert prospects to customers. The infographic from Invespcro shows the importance of existing customer.
Image Source: Invespcro
Our objective at every stage of the business is to build a strong and loyal customer base, maintain their attention and repeatedly satisfy them. And to do that, our product or its features are just not enough.
We need to tell customers what is something EXTRA that they are getting.
It is human tendency to think – am I paying more for what I am getting? And the next thing that we do is compare with other brands. This here; is the gap which we must address.
You are probably wondering that all this sounds promising but how do I convey customer value to my customers and improve my top line. You might be worried that it will cost you a ton of money and time.
Let me assure you that it is absolutely doable and rather inexpensive considering the value that you will derive for your business.
In this post, I will share with you 5 powerful ways to boost customer value. These are practical techniques which you can apply to your small business and get straight forward results. And by the end of the post, you will be itching to go out and implement them – Today!
1. COMMUNICATE TO ENHANCE CUSTOMER VALUE
Customer value is all about managing and influencing customer perception. Hence, the key is effective and clear communication. Once your customer perceives your product to be valuable, it instantly satisfies them.
Customer satisfaction is THE ultimate goal.
After all, we want returning customers, repeat business.
Acquiring a new customer is time-consuming and 5-25% expensive, according to Amy Gallo’s article in the Harvard Business Review.
The probable question in your mind now is what exactly should I communicate to my customers? How can I influence their decision to buy?
Let me give you a lay of the land.
Every product or service has direct benefits which are visible and known. We hear about these amazing features and characteristics through advertisements and other means of promotions. The thing is all these can be replicated by another company.
However, we can make a difference at an emotional level connecting with our customer’s needs and wants.
Ask yourself, what kind of problems of your customers/ prospects will you solve with your products and how?
Start by making an emotional connection.
The need to belong, collaborate with others, and reduce uncertainty is important motivator in human beings.
Initiate your offers by communicating the value of your products; educate customers to do a better comparison between brands. This inclusion will build trust and authority that sways customers towards your product/ service.
Value elements are anything that affects the cost and benefits of a product, however small or big.
You will be surprised to know that many small companies fail to effectively communicate value to their customers and miss out on great opportunities. The reason being they are unable to ascertain what is of value to their customer.
One of the easiest means to determine what your customer value is to communicate. Directly.
With your customers and consumers.
By directly, I mean in person and not using posters, jingles and advertisement. It could be through social media too but a straight conversation.
The customer should feel you are talking to her and not to the masses in general.
A lot depends on the type of communication. There is a difference between looking someone in the eye while speaking and sending an email/ whitepaper or eBook to promote your product or company.
When you speak directly, the listener listens without any noise. They get what you want to say.
2. SHOW AND TELL
Have you ever seen an episode of Shark Tank? I am a big fan of Mr. Wonderful. He cuts through all the fog and pounces on the numbers to decide. He (and the others) knows when someone is fibbing or being unrealistic.
Be honest and transparent.
Like – I have sold X units in Y months at Z price. Show them the evidence. Isn’t it easy to trust this rather than some complicated algorithm projecting your sales for next 3 years given condition A, B, C under constraints M, N, O? (Phew!)
You can convince your audience about value with hard evidence communicated in a way that is simple and easy to grasp. Don’t expect the customers to work through your facts. If they understand it quickly without any struggle, they will be open to your communication and offer.
Do not overwhelm them with jargon, statistics and content best suited for academic journals. We don’t want them to keep checking what it means or switch off entirely.
If you tell your customer that using our product will save you 30 minutes of your day, every single day; it will make sense to them. Then go ahead and show them how they will gain 30 minutes.
When they see the results, they will trust. And they WILL believe you.
3. LISTEN AND LEARN – KNOW YOUR CUSTOMER
Listen to what is important to your prospects, their problems and aspirations, past issues with similar products or service and what they wish to overcome. But to excel in your business, find your niche.
Photo by fauxels from Pexels
My services focus on small businesses. They are the ones I am trying to reach out and communicate. I am striving to offer content solutions that are valuable to small business owners.
If you try to serve the whole market, you lose focus and end up competing with many vendors and agencies. You have to segment your market into homogeneous groups.
Pick the most attractive segment or the one that aligns strongly with your offering. But the ultimate trick lies in positioning yourself in the market segment.
Decide on how and where you choose to compete. And do not think of competing on the basis of cost. That is just too shallow and temporary. Someone will come up with a cheaper offering. You can’t continuously cut your price and still remain in business.
One research on customer value across top industries like automotive, electronics, furniture, food, fashion and pharmaceuticals by Maleki, Shevtshenko, Cruz-Machado found that though there are 6 common aspects of customer value; the level of importance varies from one to another.
For example: quality is the most important challenge in automotive and furniture but pharmaceuticals and food industry value cost. Surprisingly, know-how is valued the most in fashion industry. Time and respect for environment are ranked in the middle for most industries.
Your business must identify the areas where you can establish and demonstrate your customer value compared to your competitors.
You have to prioritize and choose.
If you maintain a narrow focus and have direct intimate, emotional and honest conversation with your buyers; you will know their pain points and fittingly address them.
4. IMPROVE CUSTOMER EXPERIENCE
What do you think customers “actually” believe they are buying when they buy a book, a pack of diapers, a wedding photography service, a holiday package, a pair of branded shoes, or a carton?
If you think it is the product or service that is mentioned, then you are gravely wrong.
Each item is bought with an objective.
A book is not bought just to read. It might be to transform their lives by putting the contents into practice. A pair of Christian Louboutin stiletto is bought to make a fashion statement and not to protect their feet.
How will you know the objective of your buyer?
When you have direct communication and listen to your customers; their struggles and challenges, you can collect vital primary data. You can share it with your team to customize your solution. The customization enhances the experience. It feels personal and unique.
If a customer’s challenge is resolved through your offering, it will be valuable to them.
There is a certain amount of physical commitment and emotional stress involved while buying anything. A thought and consideration process precedes the actual step to buy.
Your job is to ensure that they spend least time to decide and buy your brand, product or service. And advocate it to their network. Word of mouth publicity and sales results are unparalleled.
Why should we care about enhancing customer experience as a means to increase customer value?
Because according to PwC, 73% people rate customer experience as a major influencer in their purchasing decisions. The survey also says that customers are open to pay more for the right kind of experience. Isn’t that a promising scope to improve margins without altering the features of the product or design of the service?
Hubspot reiterates PwC’s findings by stating – “93% of customers are likely to make repeat purchases with companies who offer excellent customer service.”
I am upfront with my customers when it comes to price, tentative delivery dates and the scope. There are no surprises. Everything is written and explained before starting the work. There is a consistency in what I say, write and deliver. Also, there is very little back and forth. It significantly improves my customer’s experience while working with me.
A Forbes article states that customer-centric companies are 60% more profitable.
You can educate them with virtual tours of your facility, to look under the hood, organize site visits to meet your people, and walk through the processes, talk and help customers visualize an issue if it ever occurs. They will be more receptive and forthcoming to work with you.
5. KNOWLEDGE EXCHANGE AS CUSTOMER VALUE PROPOSITION
Earlier in the post, I have mentioned that fashion industry values know-how. The fact is every industry and customer values know-how. Don’t you?
They are keen to know how the stuff is made before it reaches their hands. It removes a lot of conflict and gives the buyer a sense of empowerment. I know what I am buying.
Enable your customer to make informed decisions by explaining the technical aspects of your business.
There is a common tendency of customers to compare A with B on the basis of price. Content writer Cate is offering to write my post for $250 why should I pay you $300?
How do you convert the mindset of such customers?
My technique is by educating them, teaching them how to compare. I believe in sharing technical know-how. When my customers understand the process, they react positively. It also guarantees that I attract good long-term repeat customers who are transacting because of their trust in me.
Instead of letting customers and prospects do their half-baked comparative study and make an ill-informed decision which might hurt us, we must get on top of it.
Collaborate with them. Draw them into the creation process. Explain the importance of each step and how its presence or absence can impact price and quality. Show them proofs of past work, customer testimonials, sales figures.
Knowing your customer’s business gives you a rare opportunity to know your buyer and customer and get inside their head. (Not in a stalker-ish kind of way!)
When I sign a contract for creating content especially with new customers, I buffer in some time to know their business even the parts that are not directly related to me. And connect with various people in the business at all levels across functions.
People love to talk and if you are a patient listener you can amass a fortune of information that will help you. You will understand where your product fits into their grand scheme of things.
Now, armed with this information, you can market your product with an emotionally resonating angle.
But knowledge exchange should be two-way. When I make some enhancements or come up with something new, I share it with my customer base (whether they currently need it or not). I share the stories of how it has helped some other customer. I also pass on non-product/ service-related insight which is part of the larger business environment.
Communicating and collaborating with one another will help you understand the pain points, and brainstorm ideas to find the optimum solution. You get a chance to share your expertise and perspective which is useful for my customers. It may not be part of my role but we all must take that extra effort.
Similarly, if I am facing some issues with my work or foresee delays in delivery; I immediately involve my customers. I do not wait till the last moment to drop the bomb. And I never linger on the problem but stress on my plan of action to solve it in the shortest possible time.
BONUS TIP – YOU MUST FIND HOW MUCH VALUE DO YOU DELIVER?
Here is a quick tip to help you.
Know your customer.
Do a quick customer value audit using the 6 aspects - quality, cost, time, customization, know-how, environmental sustainability.
What are you doing already to communicate value?
What are your competitors doing differently from you?
Note your observations.
Identy the gaps.
If you need help to determine how much value you deliver to your customers. Here is a fantastic post worth reading.
The whole purpose of our business (and everyone else’s) is to gain market access, start selling to earn revenue and increase market share. Ultimately, customers will drive our growth and profitability.
Check this small video from Bain & Company which highlights the importance of customer value to increase shareholder value.
There are plenty of value drivers to choose from and convince your customers. You are mostly doing great in terms of your product offering, quality and price. Your brand might have a strong recall factor among your customers. But these are the aspects in which your competitors are excelling too.
What every customer across industries value the most is communication, education and inclusion – related to the industry, company, process and finally, the product. It makes them feel empowered, that they are making an informed decision. And that, in itself, is a source of value to them.
Remember the value perceived should always be more than the cost. The external environment is constantly in a state of evolution. And there are growing risks to your business. It is vital that you keep your customers close, informed and engaged to maintain their attention.
The whole argument in favor of customer value is to attain the goal of advocacy. It drives sales like no advertisement or "influencer" promotion ever will.
It is raw and accurate. Nothing is pretentious.
Show them the value of doing business with you.
Do not let poor employee attitude, unfriendly customer service and lack of trust damage your business. 17% customers leave after a single instance of bad experience. We cannot have that, can we?
So, are you ready to get cracking and show your customers the true value of working with you?
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