The perception of value is one of the most important elements of pricing. If customers don’t think they are getting value for money, you have no pricing power – you can’t lift prices to maintain profitability without losing many customers. However, if customers believe they are getting value for money, they will remain loyal despite price increases. In view of this, you need to know how to communicate value to customers.
Value is not just a single element (price); it encompasses a range of attributes of your goods and services for which customers are willing to pay. Value is provided by the low cost of goods or services, by their highly differentiated features or by a combination of low cost and high differentiation, compared with competitors’ goods or services.
Value can be separated into 7 components:
Since price is only one component of value, experienced marketers seek to maintain perceived value by ensuring the attributes of the other variables are emphasized to offset price rises – mainly using marketing communication, advertising and promotion. This is why it is important to communicate value to customers.
Seasoned marketers resist giving price discounts and reductions because these inevitably cause price wars that no-one wins, except, perhaps, the customer, but only in the short term.
How to successfully communicate the value of your brand to customers
Effectively communicating value to your stakeholders is critical for your business to achieve its objectives, whether that’s to sell products or services, convince a target investor to buy shares in your company, or recruit and retain the best employees. How you communicate the value of your company contributes to building the brand that stakeholders perceive.
Of course, a lot more goes into building a strong brand, including delivering a top-notch product, being a credible partner and managing your company with integrity. But the way you communicate the value of your product opens the door, paves the way and wraps the bow around creating a powerful brand.
Communicating the value of your product also includes handling dissatisfied customers. It is vital you genuinely listen to dissatisfied customers before they damage your reputation and business.
Ana Raman outlines 6 steps to guide you in communicating value to your stakeholders:
1. Identify what value means to your each of your stakeholders
Value can mean different things to different people and often it’s presenting it as a solution to a problem they are trying to solve. An investor is looking for a financial return, although she may also value responsible behavior in the companies in which she invests. A customer may be looking for product value in terms of convenience, quality, or price. Employees may see value in doing meaningful work with like-minded colleagues, while a company could measure the value of a service by measuring achievement of strategic objectives as well as the quality of the experience in working with the service provider.
It’s important to get a good understanding of value and how it is perceived by each of your stakeholders to convincingly communicate your product or service’s value to that audience.
2. Define what your product or service does, focusing first on benefits and then on features
The next step is articulating the benefits of your product or service to your stakeholders. Benefits translate into the results provided from a product or service, while features focus on the facts.
So whether it’s an iPhone that is slim and sleek (feature), bringing easier navigation and multifunctional convenience to its user (benefits); or the built in scrubby strip and dual nozzle sprayer (feature) of a power floor mop giving an easy-to-use yet powerful cleaning action (benefit), the value to customers is in the benefits of these products – although many iPhone users also value the beauty of their devices.
While Apple may be able to market itself on the beauty of its products today, it has done an extraordinary job demonstrating and communicating the benefits of and resulting value received from those products.
To help your business articulate product or service benefits, ask questions, a key tool in uncovering and revealing answers to questions that may appear easy to answer on the surface, but hard to do well in reality. Some questions to ask can include the following:
- What’s in it for my stakeholder?
- What’s the purpose of the features of my product or service?
- What does the stakeholder want to do?
- Why are the features of my product or service better than my competitors?
These questions help you understand the benefits of your product/service, and also help your stakeholders discover and understand the value.
3. Understand how your stakeholders consume and process information
The better you can understand how information reaches your stakeholders, the more effective your efforts to communicate value will be. Shareholders attribute greater value to individual meetings and investor presentations rather than what they read about in the media. Employees may receive and respect information delivered directly from the CEO versus a mass email. And customers may respond better to information presented on a business’s website or a live demo rather than getting inundated with flyers and emails.
There are several channels by which to communicate information, so it is crucial to get a good grasp of which channel influences which stakeholder and to what extent.
4. Communicate how the benefits of your products/services meet your stakeholders needs and creates value for them
Once you know what your stakeholders value, have articulated the benefits of your products/services, and understand how your stakeholders consume and process information, it is time to develop the communications materials that align the identified benefits to your stakeholders’ needs.
You want to develop messages that resonate with your audience and call them into action. Four tips are to keep your messages simple and consistent, make messages stick by telling a story, use visuals, and evoke emotion to inspire and make your story memorable.
5. Monitor, measure and continuously improve
How do you know whether your efforts to communicate value are working? You need to monitor reaction and measure results through predetermined metrics you have identified that measure value perception. Remember that in order to calculate changes in these metrics, you need to measure a baseline before launching your communications.
Once you have the results, build and implement improvements in your communications program – the development of messages, channels used, and the way you communicate to tell your story.
6. Move your stakeholders to action
Once you have communicated the value of your product/service to the market and have identified the stakeholders who have bought in, call them into action. Whether that’s a customer, investor or employee – they can share thoughts and opinions with their peers via their chosen medium. When your stakeholders start acting as ambassadors and referrals, you know you have reached a level of success. Perhaps they will tweet their opinion, convincing consumers on the cusp of a buying decision to make that purchase, or maybe your company will be discussed at the next investor club meeting to determine whether others will invest their capital in your business.
You may also have stakeholders who still don’t believe in your products/service’s value, and they may share their opinions. In this case, based on your company’s policy and judgment, it may be worthwhile to have a conversation with these people and gain additional feedback. Not only does the feedback help your communications strategy but it can also improve your product, service and overall business strategy.
Communicating the value of your brand takes time, research, and a well thought-out plan. So it’s extremely important to understand as early as possible what value means to each of your key stakeholders and how your business is part of the solution.