Without a product or service that offers value to its
customers, a company can not and will not be successful.
Value is a combination of 3 factors which are known as the
Customer Value Triad - quality, service, and price.
Consider what happens as each of these 3 factors increase -
1. Increased quality increases Customer Value
2. Increased service increases Customer Value
3. But Increased price decreases Customer Value
Because of this relationship, we can think of Value in
terms of a mathematical equation:
Value = Benefits / Costs
So, it's actually a ratio between what a customer gets (the
benefits they receive) and what they give (the costs they
pay). Possible customer benefits can be either functional
or emotional or both.
And the possible customer costs can range from
psychological costs to money, time, and energy spent
acquiring the product or service.
But how do we know what will be a benefit to a customer?
Understanding their needs and wants can be complicated,
because many customers really don't know what they want, or
even know what is possible to want.
The language customers use to describe needs may be unclear
to marketers. How do you interpret the words inexpensive,
pretty, or powerful, for example? These are subjective
ideas that need much more clarification to actually be
incorporated into a product or service.
Marketers have found something very interesting, however,
in the general types of needs that customers have:
1. Stated needs - these are the literal words communicated
by the customer. For example, someone in the market for
new flooring may say to a salesperson, "I need an
inexpensive carpet".
2. Real needs - these are the actual functional needs of
the customer. The flooring customer really wants a carpet
that will resist stains and look good for at least 3 years.
3. Unstated needs - these are the expectations of the
customer. The flooring customer expects to get good
installation on any carpet they buy.
4. Delight needs - these are the wishes of the customer.
The flooring customer would like to get quick delivery of
their new carpet.
5. Secret needs - these are the unconscious needs of the
customer. The flooring customer would like their friends
to think they got a really good deal on their new carpet.
Simply selling customers what they say they want isn't
enough. Maybe you've heard the saying "buyers are liars".
This isn't because companies or salespeople don't like
buyers - of course all businesses love their customers!
The saying "buyers are liars" refers to the fact that the
majority of customers can't know everything about a
product. So when a customer who walks into a floor
covering retail store says, "I need an inexpensive carpet"
- what they probably mean is that they want a carpet that
brings them good value.
My point is that solely relying on a customer's stated need
could easily shortchange the customer. To be the best in
any market, a company must help customers learn what they
want. This is done by effective sales and marketing at
every level of the organization.
At the heart of any company's marketing, they must
communicate the answer to 4 key questions. This is because
the customer is asking themselves these 4 critical
questions-
• What are you offering?
• What does it cost?
• What does it do for me?
• Why should I trust you?
You must be able to easily answer these for your customer
in order to sell any product or service you offer.
"No matter how good you get you can always get better"
-Tiger Woods
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Laura Adams is the host of the popular MBA Working Girl
Podcast. The content combines brainy business school theory
with real-world business practice from her career as a
business owner, manager, consultant and trainer. Subscribe
for FREE to this top-rated show and get the useful MBA
Essential Tip at http://www.mbaworkinggirl.com
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