Value. This is a term that is bantered around all the time. You hear it in marketing books and sales guys can’t help but mention it all the time with terms like “value-based selling” and “value drivers”. But what is value and what does it mean to your world.
Value according to the dictionary definition is “a regard that something is held to deserve” or “the importance or preciousness of something”. This doesn’t really say a great deal except that value is something that we regard as important or precious. A common word that we hear associated with value is benefit ie. Value = Benefit.
In business, people hold perceptions about what value they attribute to certain individuals, items or organisations. For example your potential value-add is the real contribution you make to your organization, team or customers. People also understand that value can have a cost and therefore “Value = Benefits – Costs” is often used as a way to measure value.
A good, albeit cynical way to look at it is when someone asks you how you are – what they are really asking is what can you do for me and what value will that bring.
Some of the key areas to consider in answering that question if you intend on adding value is:
1. Are you truly solving a problem?
By someone typically we refer to internal or external customers. People that matter. This is about listening and understanding what their problem is for a start then solving this. It is not about listening then failing to help it is about truly helping and picking the battles that you can win. This is a key one for sales people as the premise behind this is to firstly understand your customer’s needs and there is lots of literature around discovering, actively listening and clarifying what you have heard to ensure you have truly understood. Covey puts it quite nicely in his 12 Habits of Highly effective people: “Habit 5: Seek First to Understand, Then to Be Understood.” Often these problems are not visible and need to be discovered. This is where the following point is relevant.
2. Are you credible and have you built trust?
A common problem why people do not add value is because they are unable to do so or are unaware of problems that they could potentially solve. A big part of this is because customers may not trust them enough to invite them to help them. This could be on account of the the fact that you have not done a good enough job to build trust. There are a number of ways to do this, such as being reliable, doing what you say you will do and doing it. Cancelling or failing to follow through can impact your trust worthiness. Never lie – people can sense it. Volunteering information will help to prove that you have nothing to hide. It is best not to omit important details in accounts as people will start to notice contradictions in your stories. There are a number of other ways to build trust and most are common sense.
3. Are you setting expectations that you can easily exceed and is this enough?
Once you have understood what is required to add value you need to be able to ensure you deliver. Setting the right expectation with your customer is paramount to this. This is all about expectation setting. It is always better to set a lower expectation and exceed this than to over promise then under deliver. This is where you need to manage the customer’s perception and if this is unrealistic then you need to be able to substantiate this with real life examples. People set their expectation based on what they experience and they will benchmark the value you bring in line with this. There is also an interesting relationship with cost here. Often good service needs to come at a price. On the flip side if they are paying for a good service and you don’t provide it then you stand the risk of losing your customer to a competitor.
4. Perception can be more important than reality
Everybody perceives value differently. That is because everybody’s version of good is different. We all like different things and that is what makes us human. This is why it is important to understand what is valuable to the person. An important consideration here is that the perception of value and ideally quantifiable value is that it is always directly attributed to personal experience.
For example customers will form an opinion of a product based on their experiences about that product. Rory Sutherland has an interesting view on this. He articulates that there is a difference between people’s perspective based on their circumstances. According to Rory Sutherland reframing the value in accordance with the context is the key to delivering value. An example of this would be that when a person is thirsty they are more likely to find this valuable than when they are not. Common sense right? The interesting thing is that the price of the water wouldn’t have changed but the value definitely has.
5. Prioritise quantifiable value over intangible value
Making sure that value is recognized in business is always much easier when it is tangible. By this we mean that the benefit can be attributed or calculated with some kind of metric. Metrics are a lot more credible than anecdotes so when deciding what value you can bring always prioritise activities that can be measured as they will be more specific and much easier to articulate later. Secondarily to that intangible or unquantifiable value can be demonstrated this is value that helps but in a more round about way. An example of quantifiable value would be that John invested $50,000 in the service improvement programme or Sally spent 2 days building a project plan for the implementation project. This ensures that value is directly attributable to you and can be later measured. “What gets measured, gets managed.” – Peter Drucker. This quote is important as if you aren’t tracking yourself how can you measure the value you are adding and what you need to do to improve this.