Recently I was reminded yet again that value is both a simple yet subtle concept. We were reviewing a value model created by one of our client’s marketers for a new construction product that is sold to residential building contractors. The specific question at hand was: how do you estimate the value of a particular performance feature, namely “mold reduction”? Is the correct answer:
A) The current cost of removing mold
B) The cost of handling customer complaints about mold
C) The risk of future legal costs related to mold
D) All of the above
If you chose D, you have the right idea. All three of these value drivers can exist for certain customers. And theoretically there can even be more benefits, consider:
E) Increased revenue because of higher customer satisfaction (through referrals)
F) Faster collection of accounts receivables (less cause to hold back payments)
The reality is that a single feature like mold reduction can have multiple positive economic benefits for a building contractor, encompassing not just multiple costs, but also revenue and even assets. Note that all of these impacts are quite tangible and straightforward and cab validated and quantified by asking the customer: “How much do you typically spend on removing mold for a given project? How often does this happen, etc?”
Customers find this kind of value story far more compelling than general claims because it directly answers the fundamental question of “what’s in it for me?”
Smart marketers need to take a deep-dive to understand ALL of the potential economic impacts of their offerings to their customers. Not doing so risks overlooking some potentially significant sources of value that can be crucial proof-points of differentiation – not to mention justifying a premium price position.
Of course, understanding and modeling value for multiple offers across different customers is challenging without the right tools or expertise. That’s why LeveragePoint is in the business of provides an online tool which guides marketers through the process of understanding and communicating value.
VP of Products