What is value?
This seems like an easy question to answer, but value isn’t objective. Each of us knows what we as individuals consider a value. For me a vacation value may be an upgraded spa package or admission to museums and shows included in the price. Value to someone with more disposable income may be limousine service to the airport, first class air fare or a suite upgrade. For a young family value may be that the destination is drivable and it comes with happy meals.
While those three value options are very different they are not interchangeable. You can’t offer me a happy meal and expect me to be happy about it. You can’t offer a young family first class airfare and expect them to think they are getting a value. Each of us are committed to our own expectation of value.
Perspective is everything
When companies tell me that value is what sets them apart from the competition, I have to say, “Of course it’s value, but to whom?” The wrong value to the right customer won’t work, any more than the right value to the wrong customer will. I’m not being glib here. In order for value to have any resonance with your customer, you need to define what value means to your customers before you start telling them that you offer value.
Customers determine value
I like to use the cheap vs chic bell curve to help determine what customers value. Think of a standard bell curve with chic customers on one end and cheap customers on the other. Chic customers don’t place a significant value on price. The chicer they are, the less important it is, and offering discounts or even saying “value” can reduce response. Chic customers want to pay top dollar, and they consider high price their guarantee of quality. Cheap customers are very motivated by price. When you say “value” to a cheap customer, they are expecting a great price, BOGO, Two for One, or something that they can quantify. When you say “value” to a chic customer it’s usually either something that is ego gratifying, like doing good (think Tom’s Shoes), comfort oriented, like getting an upgrade, or a “priceless gift” i.e. something that money can’t buy, say a special gift with purchase.
Value is very flexible
Because value is so flexible, delivering value can be tricky. Offering deep discounts to a chic customer will lower the perceived value they have for your goods and services. Offering a non-financial incentive to a cheap customer will make them think they’re paying too much. To make matters worse, your wildly successful email discount program may actually be culling out the more lucrative chic customers and training your cheap customers to expect a deep discount. Remember how JC Penny’s over reliance on discounts lead to their downfall? They kept telling themselves that customers loved them, when in truth their cheap customers loved them and their chic customers left town.
What’s a marketer to do?
Don’t strive for value. It isn’t measurable and it isn’t something you control. Don’t talk about value as a customer benefit, it is vague and meaningless. Focus instead on offering customers what THEY value. If you are a discounter with cheap customers then discounts will work—go for it! If you’re not a discounter, then be very careful about offering discounts and testing other incentives instead. Consider that Apple is the highest valued company in the world, and they’ve never had a sale.
All the best,
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