The Perception of Value

“We are all in the gutter, physician but some of us are looking at the stars.” – Oscar Wilde

If you are a craftsman trying to make a living selling your products, cialis 40mg here’s some bad news for you:

Value doesn’t sell products. Having the best, being the fastest, and building the highest quality anything doesn’t get you customers, doesn’t make you sales, and doesn’t bring in any cash. In fact, making the best of something often means you will make less money than if you had made something worse.

Many people think that business benefit is generated by producing things of value, but if you look at poor products with good sales like Beats By Dre, Nike’s Chuck Taylor All-Stars (Yes, Nike owns Converse), or even Facebook, you can see that bad products with a good brand can dominate a market nearly indefinitely.

What sells is not value, but the perception of value, and the perception of value is very seldom directly linked to “actual” delivered value in any tangible way. Although this will be an anathema to most of you … in a business context, a product’s worth is only what the customer thinks it’s worth. Therefore, if you don’t have a plan to align your product with your customer base, it’s already doomed. Your idea, your product, your hard work and the capital invested might as well get flushed.

Consumers perceive value as something that affirms their existing mindset. If your product seems to resonate with their view of the world, and makes an emotional connection to what they consider tasteful or aesthetically pleasing, then you’ve got the potential for a winner.

Those brands that ride this wave, positioning new products ahead of or even just behind new trends in customer desire are the most successful. The very best performing companies are those that get out in front and create those waves, but that’s more expensive and difficult than many small scale product builders can imagine.

Those brands that maintain this activity consistently become part of that customer alignment – products they introduce are automatically aligned with their past, tied into the continuity of brand culture.

Even fads which genuinely hurt consumers can be wildly successful if they resonate with an audience. Some of the more ridiculous ones like the anti-vaccination movement, Sarah Palin’s candidacy, or even religions succeed by simply casting facts and intentions aside and allowing themselves to change to whatever the consumer wants to hear at any given moment. When they stick to their guns, they wane in popularity. When they pivot and deliver self-contradictory messages, they succeed – as long as they align themselves with what their audience already wants to hear.

So, accepting this, are the twin pillars of quality and substance, the drivers of Real Value dead? Let’s explore what value is in an attempt to answer that.

To deliver a book once required near-infinite effort and patience. You not only needed to acquire the knowledge that went into the book and cultivate the ability to convey the thought, but you also had to know how to make parchment from scraped and softened goat hides, how to carve quills from feathers, make ink from burned acacia gum, ochre and oil. There was no room for mistake, no editing possible. The creation of a book was potentially the effort of a lifetime.

Through the invention of paper, Gutenburg’s press, the desktop printer, and now computers and the Internet, it’s never been easier to create and deliver a book. Today, a valuable book can be created, delivered and read by hundreds of people in a single day.

Amazingly, the value to the consumer has largely stayed the same throughout this process. The information delivered, to the correct source, has largely the same value whether delivered as a rolled goat hide or a kindle ebook.

Your effort does not create value.

So, once again, what is value? It’s not the cost to make something, it’s not your blood, sweat and tears and capital. It is, ultimately, the level of enrichment you the recipient experiences through purchasing and using your product. Value can be delivered through several drivers, including:

Emotions: Entertainment, Aesthetics, Novelty and Social Proof

Possibly the greatest driver of product value in western civilization today, people seek entertainment and escape from largely unrewarding lives. People also crave the aesthetic – things that help them appreciate and engage the nature of beauty. Rounding out this trio, the distraction of novelty drives people to seek out things at the edge of their experience.

Lastly, don’t underestimate the value of social proof. People want others to see them as they want to be seen – as a smart person, or as a hermit or as a early adopter, a tech expert, full of old-fashioned wisdom or great fashion sense, connection to spirituality or environmental causes, or perhaps as a person wise with money. To crib from The Breakfast Club, a brain, an athlete and a basket case, a princess and a criminal.

By allowing your brand to resonate with those ideals, people will adopt your products in order to reinforce their association with those ideals to others.

Convenience

Making it easier for someone to do something provides tremendous value. It’s probably the greatest product driver after the pure emotional ones above, largely because it gives people more time to engage in those emotional pursuits. Nearly everyone hates doing menial stuff – if people believe you can free them from it, they’ll come on board.

Lowered opportunity cost

To accomplish the things we desire, we must give time, energy and money. This is the cost of accomplishing or experiencing something, or in economic circles, the opportunity cost. Tied to Convenience, Lowering the opportunity cost is of tremendous value, as it can allow individuals and organizations to accomplish things that would have been impossible before. While not as easily perceived by most people, it is as important as any other property-creating value.

Force multipliers

A special form of opportunity cost reduction, force magnification takes whatever effort we put into an endeavor and makes that effort go further. Whatever direction we push in, we can push further and accomplish more with a force multiplier in place.

Premiums

Most people care less about cost than you may expect. What they care about is delivered value for price. If people perceive your product or brand as a premium, but your pricing as economical, then they are able to fulfill the desire to be wise spenders, without the ‘penalty’ of lower consumption.

This is not the same as being seen as “cheap,” which only decreases perceived value. Increasing your perception as a premium brand will simultaneously increase sales and customer willingness to spend over the lifetime of a relationship. Decreasing your price will increase sales but decrease customer willingness to spend, resulting in a net loss over the lifetime of a fully realized customer.

So, back to Actual Value. Why do we do it? Should we bother?

I admit to grappling with this from time to time. The purely machiavellian response is: If you can get people to continuously perceive value in your brand and products, then NO, it does not matter if you deliver actual value or not. Not for the purposes of building a business. The perception of value is the only things that matters in selling, and actual value falls by the wayside. Many businesses, organizations and products deliver minimal value and do just fine. But I can’t get myself to go there.

Now, there are two bigs issues that the previous paragraph neglects: Ethics and Sustainability.

Ethics

Permaculture instructs us in care for people as well as care for our community. Building a life around constantly snookering people is just horrible, from a karmic perspective. I’ve been asked to consult in more than a few of these organizations, and if I can’t turn them around, I tell them their money just isn’t green enough for me. This is a personal choice, but if you’re the type to be here, reading this, I hope you choose the way I do. If you don’t deliver value, if what you produce doesn’t allow others to obtain a yield, then do something else, please.

Sustainability

Ultimately, maintaining a brand that sells with perceived value becomes difficult if you don’t actually deliver some value. You’ll be fighting an uphill battle with every review or bad piece of word of mouth that people report. Delivering real value is the easiest way to keep customers once you’ve got them, too.

But, then what was the point of this article, if I’m just leading you back to the same place we started? I’m not!

The perceived value is what you use to sell. The actual value drives our satisfaction as creators and moral people, and brings the customer back for more. The secret is … they don’t have to be the same value!

That’s right – the perceived value, the pitch, the thing they buy your product for can just be window dressing to get them to use your product. When they get it, they may find a completely different set of uses – real uses. If you get someone to buy a set of headphones because they think Dr. Dre uses them (he doesn’t), wouldn’t it be nice if they wound up with a great set with broad frequency response, with a great high end and killer bass? Well, people who buy those ’phones don’t get that experience – but your customers could!

If you sell your line of sketchbooks with the implication that they will inspire a hidden master artist inside anyone (they won’t) wouldn’t you want the purchaser to discover your amazing build quality, care in stitching, amazing lay-flat spine, etc?

These examples are not bait and switch. They are cases showing the use of perceived value (which is aligned to what the customer already wants) to introduce them to your real value (the amazing thing that you and only you can do). This process, of balancing perceived value with real value, is the cornerstone of successful product development: Yes, you should deliver value. But for your company to survive, you must deliver perceived value.

What Value do you deliver to your customers, and what perceived value brought them to you?  Let me know below.

 

Principles

Scott is a multidiscipline technologist and problem wrangler. His day jobs include writing code for mid-size businesses and startups, consulting on business process for young companies and organizations, and applying permaculture design philosophy wherever it’s appropriate.

Scott is available for limited consultation on a myriad of topics. [email protected]

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