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Real Value: Why Do Your Customers Buy From You?

– By Mike Wilkinson

Very few customers buy anything simply because it is cheap.  They buy because they see a balance between the price being charged and the benefit, or value, they perceive they gain.  In other words there is a clear trade-off between price on the one hand and value on the other. As long as the buyer sees the value as being greater than, or at least equal to, the price, then there is a real prospect of a sale.  Put simply: 

Value = Benefit – Price

If this is true, then a huge challenge revolves around value – what is it and how do we communicate it?

What is value?

To put it bluntly, value is a mystery!  That might sound flippant, but the reality for many businesses is that value is either a mystery or simply defined incorrectly.  If we know that customers buy because of the value they see your product or solution delivering, then logic says we need to find out just what it is they value.  The key message here is that value is defined by the customer, not by us.

Of course it is important that we have a broad understanding of the value we can potentially deliver, but it is crucial that we develop an understanding of the value our customers WANT us to deliver.

The only really effective way to do this is to ask them. So at the heart of this is our ability to communicate effectively – and it is perfectly possible to create a differentiation around our ability to communicate with our customers more effectively than our competitors can do.

In and Out Communication

We need our communication to excel in both directions.  Incoming communication in this context is our ability to engage with our customers in such a way that we gain the information we require in order to meet their needs.  Outgoing communications is our ability to then clearly and accurately demonstrate our understanding and the way in which our solution meets these needs and delivers great value. Getting both of these things right, and communicating clearly, concisely and honestly is a challenge in its own right.

The statement that encapsulates for the customer what you can do is frequently called your ‘Value Proposition’.  What it’s called doesn’t really matter, but what it needs to do is vital. It should help differentiate your solution when compared with other, competing alternatives.  It should answer the question “Why should we choose you rather than a competitor?”

So, for example, try asking some of your existing, trusted customers why they buy from you.  You may be surprised at the answers and it’s a great way of beginning to understand the kind of things that other, similar, customers may value.

Once you know the value your customers are looking for, it makes creating a value proposition much easier – always assuming you either have, or can create, a solution that adds value and differentiates you from you competitors.  If you cannot differentiate what you do then, sadly, you may have to revert to price as your sole differentiator.  However, our experience is that there are very few situations where, with a little ingenuity and investigation, a differentiation cannot be found.

Why should I segment my customers? One of the reasons for segmenting your customer base is to categorise customers into groups with similar interests and similar ways of doing business. This makes selling and marketing to them both easier and more cost effective.  It also makes the generation of segment level Value Propositions more targeted and more effective.

What is differentiation? 

The simple answer is that it’s your ability to deliver more of the things your customer values than your competitors can do. Once again it’s down to communication – do you really, really know what your customer wants done and what they value, and have you done a good enough job of demonstrating your ability to deliver?

Being different is not, necessarily, differentiation.  Being different in ways that your customer values is – but it means your two-way communication has to be excellent – knowing WHAT the customer values and demonstrating HOW you can deliver that value more effectively than competitors.

The final element in the Seven Challenges of Value is our ability to deliver.  It’s where your promise becomes reality.

So do you really understand the value your customers are looking for – and are you delivering it?


Mike WilkinsonMike Wilkinson is a regular Academy speaker and director of Axia Value Solutions, a consultancy that focuses on helping their clients build their margins and profitability.  They do this by helping them develop a real understanding of the value their clients are looking for, the value they offer and how this can be differentiated, priced and sold accordingly.  

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