By: Jacob Robinson
The principle of ‘value added’ is critical for every business owner to understand, no matter how small or large you are, or plan to be in the future. If you can focus on and implement this concept, you will set your business up for long-term success, creating a loyal and solid customer base.
First, what is value added? The concept of value added refers to the positioning and act of building the actual or perceived value of your product, service, or business within the market you serve. You can position your product or service through physical changes, process changes, or service changes. In doing this, we create physical or perceived added value in our product or service.
Why do we want to provide added value to our customers?
So why is this important? Let me start with this. A good friend once told me, “There’s a direct correlation between how long it takes to gain business and how long it takes to lose it”. The easier it is to acquire a customer, the less loyalty that customer has to your product or brand. It’s easy to lose that customer for the very same reason you gained them in the first place. Simply put, if we want to acquire and retain customers and build partnerships based on something other than price, adding value added services makes sense.
I often hear business owners say “I have the cheapest prices in town” or “It’s so hard to compete with the big box stores because their price is so low” or “John Doe is selling his product for $10 per pound, so I have to lower my prices”.
When we build a business foundation on having the best price, we are cornered into competing on that variable. We are competing in an arena where the low guy wins. But when you win business on price, are you really winning? I’d say no. You just acquired a customer that has zero loyalty, and that will, without hesitation, use the next low bidder (i.e. your competition). This holds true for small and large businesses.
At this point you’ve decided one of two things-
- You want to learn more about value added and implement ideas to grow your business OR
- You don’t think it applies to your business
Here’s where I challenge you. No matter the size or status of your business, adding value to your customer’s experience is a good idea. There is no exception, even if you operate within the commodity arena, where price is purportedly king.
What does added value look like? Here are some great examples:
- Providing a 24/7 support line to customers who need assistance
- An auto shop providing a shuttle service for customers
- A doctor’s office that uses a reminder service
- A plumber guaranteeing a service call within one hour
- Fine food delivery from an upscale restaurant
- Just in time inventory programs in manufacturing
- Home dry-cleaning pickup and delivery
- Free gift wrapping
- Complimentary breakfast, shipping upgrade – complimentary anything
- Wi-fi in your waiting room
The above services differentiate our product, service, or process to meet the needs of our customers. In doing this we achieve a stronger relationship with our customer by providing a little something extra (ie. added value).
How do you differentiate when everyone is providing added value services?
How do we bring more value to customers when our competition is doing the same? And rest assured your competition is doing the same. What was once different has become the norm. How many mechanic shops offer a free shuttle? Most of them nowadays. How many HVAC contractors will be at your front door within the hour? If they want your business they will be. We have to take it a step further.
Three simple steps to adding extra value for your customers
#1 Understand your business. Make sure you know which needs you currently meet. This should be a no-brainer, but ask your customers anyway. You might learn something new or useful!
Ex. I build websites for businesses who need an online presence.
#2 Identify opportunities. Identify needs you are not currently meeting. Can you meet any of those needs? Will they complement your current products or services? Will this additional value be something you can implement without breaking the bank? Carefully consider financial and labor costs with providing any value added services.
Ex. I find out my customers would like to interact (through newsletters and email) with leads that are generated through their website.
#3 Act to meet the additional need. You’ve identified a great value added service. Now you have to implement it. Make sure you check in periodically to monitor success and/or failure.
Ex. I work with my clients to conduct email marketing campaigns.
Now you’re a value add wizard! Oh, and increasing your brand loyal customers
What have we just done? We have become a partner. I went from being someone’s website guy to being one step closer to meeting any digital marketing need. We’ve created a situation where loyalty is strong by providing extra value that customers may not get from the other guy.
Take yourself out of the dry-cleaning business and put yourself in the “I can clean a suit in 2 hours so you can make it to your meeting on time” business. Take yourself out of the catering business and put yourself in the “Worry no more, not only will I cater great food for your event but I can plan your entire company picnic” business. Take yourself out of the veterinary business and put yourself in the “The vet will call you directly to talk about Fluffy’s surgery post-op” business.
So here’s your challenge. Look at your business. Look at the market you serve and ask yourself…how can I differentiate myself by meeting specific needs and bring more value to my customers?