While the terms price and value are many times used interchangeably, they are not the same. Recently, we asked the question, “what should you know about your customers?” We shared that hyper-personalization designed by using a combination of historic and real-time data helps you provide better personalized recommendations with higher conversion rates. This provides your customers with added-value and leverages the fundamental ideas of Customer Value Models (CVM).
Understanding value versus price.
Imagine traveling across the country to give a live seminar to a large group of people after spending two months developing your presentation. If your $1,000 laptop housed your presentation, and was lost at the airport – how much would it cost to replace?
Who cares, right? You can replace the laptop with a new one, but not the value of having your presentation when you need it most. The event could be canceled, and all the related revenue might be lost. It’s possible that the venue would blacklist your company from having future events at their location. The replacement cost of your laptop has nothing to do with its value in this scenario. Customer Value is defined as Value = Benefits – Price.
Using CVM to accelerate success.
Companies can use CVM in a variety of ways. However, it does not replace predictive and prescriptive analytics nor hyper-personalization. Rather, it supplements these tactics. This is where success acceleration really happens. It’s important to consider that customers have price caps – a limit on total price they are able or willing to pay, despite total value. Here are two ways that businesses are effectively using CVM to accelerate success.
- Improved Development. Through CVM, businesses are able to better determine which potential new products and services provide the most value to their customers. When we focus on benefits, rather than features and functions, value increases. This allows a business to raise prices to increase revenue or maintain price with the higher value to increase customer loyalty. Both approaches can be used.
- Sales Growth. Two ways to grow sales is through motivation and validation. Motivation turns leads into customers. Give them a reason to do business with you by giving them the (value) offer-they-can’t-refuse. Use validation to build loyalty within your current customer base. When you validate your customer’s decision to do business with you by showing that your value is more than your price, your business will grow. You’ll see increase in lifetime customer value, average-order-value, and improve overall customer experience.
Points of Parity and Points of Difference
According to the Harvard Business Review, “stressing as a point of parity what customers may mistakenly presume to be a point of difference favoring a competitor’s offering can be one of the most important parts of constructing an effective value proposition.”
Some functions and features of a product or service are just standard within the industry – they’re expected. Customers may not be able to distinguish between parity and difference, then go with a competitor’s offer if your messaging isn’t convincing.
Increase value by addressing what matters to your customer.
FiO ai-InteleKt™, for example, is different than our competitors. While you can find a bottomless pit of companies to collect and deliver data to you about your customers, raw data has a low value. In this case, data collection is the point of parity. We recognize that our customers want more, so we offer an out-of-the-box solution.
We collect data and drive real-time buying decisions by implementing Hyper-Personalization, Prescriptive Analytics, Customer Journey Analytics, and Closed Loop Integration to help clients grow. While competitors might offer a lot of data, we focus on using data to provide a lot of results, and that’s what our customers really want – point of difference.
If you want to know more about FiO ai-InteleKt™, book a demo with us, today!