The concept of Value – in Services – 2

B2B, Product Management, services, Value, value proposition

In the post yesterday we had seen how services can have different values for different people and its our responsibility as sellers and product managers to create the value differentiation. 

If we look at the B2B segment, there’s a very clear difference between how the value is seen if it is helpful in getting revenue or is it about cost.

Anything which can help increase revenue is always more valuable, versus anything that is about cost is always going to be seen as less valuable.

Therefore any proposal on the cost side will take longer to close, until and unless there’s an emergency of some kind, versus a proposal which talks about increasing revenue.

Even when you’re going from the “gate” which brings in the revenue, you have to be able to showcase how your service forms a solution to their overall problem of increasing revenue. As an example,you can’t go in saying I am a content writer and therefore I can increase revenue….you won’t be able to move ahead.

On the other hand if you understand the problem that they have and how content writing can be the solution to their problems then you have a bright road ahead.

Its happened with me many times, where , we created an amazing offering for the cost side and were not able to get it to move with customers because they were already solving the problem in a different way. But we started getting traction the moment we moved towards re-orienting the solution from the revenue side.

This is a key thing to learn for all of us who are in the services business of any kind.

Till next time then.

Carpe Diem!!!

The concept of Value in services

services, Value, value proposition

When you operate in the stock market, someone buys a stock at a given price and someone sells at the same price. For the seller it seems like a a good value to sell at that price, because she thinks it may not appreciate in value. On the other hand the buyer thinks that the stock is undervalued at the given price and has a possibility for the price to further increase. However both can go wrong in their estimates.

Unlike a product which has well defined boundaries, a service could be more fluid in nature. Which means that the same service can mean different things to different people and as the seller its your responsibility to bring out the value of a service.

The value will only come out if you know how the service will impact the user. If you can help me improve my revenue 10 times because of your service then, I may be willing to pay you a much higher amount, then if I can’t make out the value you can add.

Like in the stock market the value is what the buyer thinks and willing to pay. But unlike the stock market, here the seller has to be able to bring out the value.

You can fly from Toronto to Delhi in about $1000/- in economy, sitting for 15 hours , packed with 200 people and then sleep for the next 24 hours after you land, because you are exhausted.

Or you could spend 5-7 times as much in first class and travel sleeping and rested , to get on with business immediately after you land.

It’s the same aircraft, that is carrying the 200 people also, nothing different. But if by not being able to work in those of 24 hours is going to result in me losing more than $50000/-, then I will travel first class. For me there’s a value of $50000/- which I can generate by spending $7000/-. That’s what airlines sell – Cash at discount and I value it.

But its your responsibility to identify the right audience who will value what you sell. This is critical.

Till next time then.

Carpe Diem!!!

Price versus value, cost versus value- Part 2

Positioning, Value, value proposition

Apple is a perfect example of value in the mind of the user.

In my last post on this topic I had written about how value like beauty is in the eyes/mind of the user.

No one knows to exploit this better than Apple. You have seen photos of people queuing up in front of Apple stores hours before the opening to buy the newest iPhone to be launched.

I am not an iPhone user but we do use Apple computers at home. And when my last MacBook Air’s battery started giving me problems I decided to buy a new one. This was October last year. When we started looking, the first thing we noticed that Apple was intending to come out with a new processor based system soon. This processor would reduce battery usage by a fraction and performance was atleast 2 times more. So instead of immediately buying the readily available product we decided to wait because we saw value in that. Eventhough we also knew the price points would be much higher.

The M1 chip MacBook was launched sometime November last year in the US, but it was not available in India till April this year. And then the second wave of Covid hit India and everything was in lockdown. So again we waited. Finally we got our new Apple M1 MacBook Air in June end.

If you can create a position in the minds of the target audience, then cost becomes a secondary factor, it is the value that the customer perceives which makes all the difference.

Till next time then.

Carpe Diem!!!

Price versus value, cost versus value

differentiation, Marketing, Positioning, Product Management, Value, value proposition

This is a pertinent question in marketing or sales. I keep getting the statement – the price is too high – compared to what?

Does anyone going to a Ritz Carlton or a Four Season hotel say the price of the room is too high. Does anyone who is buying a Roll Royce or Lamborghini ever say the price is too high. For a lot of people the Mona Lisa is just another painting, but for a lot of others it could have huge value hence its kept under so much security unlike another painting in the Louvre museum.

I think its the marketing and sales teams’ responsibility to position the offering that they have, correctly. This does not mean that there won’t be competitive situations. Especially in technology marketing where the entry barriers are very low, the competition heats up very fast.

Even in technology companies though you will see that there are disruptors who come in and take away a large share of the market suddenly but companies like IBM , Oracle and others who continue working on giving more value to their customers and charging a distinct price differential.

The key point that needs to come out is Value. Like beauty lies in the eyes of the beholder, value is specific to the buyer. Unlike Gold which has a fixed value defined, most other things like houses, shares etc. all have relative value. For one person who is selling a share the value is less than the price he is selling it at, while the buyer is seeing more value than the price she is paying for it, hence she is buying it.

Similarly if the customer see the value that you offer for your product same as what someone else offers, then the only differential is price that the customer can work on.

One of the best ways to reduce the cost/price value argument is to educate the customer so she sees you as the authority on the subject. I have shared multiple posts on how education has eliminated the price discussion from the buyer’s mind altogether.

Other ways off course include things like the ecosystem – if you are part of a proprietary ecosystem than you have very little competition – IBM Mainframes , Apple and others have very strong ecosystems and the discussion on just price does not take place.

The key for any marketing or product management person is simple they have to be able to build the value of the product or service in the minds of the customer preferably through education. For the sales person its important to identify and understand the value that the customer is looking for before easing time on a deal.

As I said earlier “VALUE” lies in the mind of the person buying.

Till next time then.

Carpe Diem!!!