At one point or another, whether you are a business owner, a manager who is trying to engage a customer, or the customer who seeks a Product or Service, we typically ask these two questions:
Is this the Product or Service that I need?
What is the Product or Service worth?
Both are pertinent questions when trying to determine Value Perception. Defined, “Value Perception is the opinion that current or potential customers have of your Product or Service.” Why is this important? Because in the end, this determines the worth of said Product or Service.
This concept is not objective, but subjective. It is as much Psychology, as it is Marketing and Economics. I ask about “Need” versus “Want”, because at that point we have reached the tipping point in a person’s mind, the justification of the purchase. You have reached that person on such a deep level that they must have your Product or Service. That justification and bond in turn creates Demand because your understanding of the customer has shown them what they are lacking and that their life will be better with your Product or Service.
We have reached the point where many in business struggle with the concept of Value Perception. In our MBA-laden society (and for the record I hold an MBA), we hammer the financial concept of Return On Investment to anyone and everyone that will listen. It has become cliche. It is easier to grasp for most because it is numbers-based, or quantifiable.
Most people in higher levels of business come from analytical backgrounds, where concepts are rigid, and value can be easily determined on a spreadsheet. They were trained through schooling that this is the most important concept in the psychology of business, ROI. Because Value Perception is more about understanding the mind of the customer, it is terribly difficult to quantify.
Now ROI does hold value, and I am not suggesting that a smart business person should not use metrics and analyze their business. With that said, the concept of Value Perception is steeped in Creativity, Relationship Building, Understanding the Want, Converting the Want, as much if not more than “How much revenue can we derive from this Product or Service line?” It could be said that if you understand the Value Perception of your customers and potential customers, that you will grasp that market segment and retain it...as long as you continue to invest in the understanding of those customers.
Value Perception is much more involved with the qualify. Although ROI is not thrown out the window, it cannot be measured with the accuracy that many desire. There is also a lack of desire to understand just how important the art and science or Relationship Building is to attracting, and retaining long-term customers. Retention is a significantly lower cost per customer than acquisition. This lack of desire and understanding could be partially due to the fact that the graduate business school teachings focused on the quantifiable for decades, only recently shifting focus to a more whole view business model.
If you believe that your business is ready to engage consumers for a long term relationship, make the investment with all of your resources; not just revenue, but mind, body, heart and soul. You may find that you have not just a customer but an advocate for a long period of time.