In tough economic times, consumers go where they still get the best value. You either have to increase the value side of the equation or reduce the cost equation. Reducing cost can have significant long-term effects on your business, since prices are typically difficult to raise until demand increases to the extent that consumers are willing to pay more to get what they want, when they want it (don’t expect this to happen soon!). Value, on the other hand, can help you out in several ways: it can increase loyalty more than pricing ever could and it can differentiate your business in a lasting, meaningful way.
So what can you do to increase the value side? And do this without spending a ton of dough giving away stuff for free? Take a 720° look at your business.
What does 720° mean? Good question, and you’ll profit by understanding it before your competitors do. The number 720 is 360 times two. As you may know, “360°” is business jargon/consultant speak for taking a comprehensive, “full view” of something. We use the “times two” reference because when owners look at their businesses from two different 360° viewpoints, interesting opportunities to add value emerge.
360° #1: The customer’s broader problem. More often than most businesses realize, their service is just one part of, or related to, a broader problem that the consumer is trying to solve. You need to really think about the customer from their standpoint. Understand what they’re trying to do, not just why they’re thinking about your business and its competitors.
360° #2: Your business operations. Look at everything you do as a company, including core operations, marketing/advertising, and even administration as potential value creators. Find the assets that are unique/superior, or under-utilized, and put them to work in creative ways to help your customer get more.
720° is the idea of thinking as two distinct entities: the business owner and the consumer. By wearing two different hats, can you configure services that deliver just a little extra sweetener to your value proposition? Sometimes for additional revenue, sometimes as a ‘free’ service if you can deliver it efficiently. In both cases, it creates a competitive advantage because it solves problems for the customer. And customers love having their problems solved!The customer 360°
You’ve heard people say ‘think like your customer.’ The 360 is meant to do this in a very specific way. Stand in your customer’s shoes and think about all the things that the consumer could be concerned with that are related to your product or service at the time it’s purchased. Sometimes this relationship is direct, like the home cleaning that has to be done after a remodeling or home-improvement project is completed. Sometime it’s indirect, like the other wardrobe decisions that follow the purchase of a cool new dress. The goal is to understand these relationships and find creative ways to help the consumer solve additional problems that are associated with the purchase.
You don’t always have to give these services away – as long as you help the customer see the whole problem and how you fit in as a solution. If your competitors don’t do this, you’ll often win even if you’re charging a little bit more for the extra value. Whether or not you need charge extra depends on how you use the resources you identify in the second 360° – your operations.
The business 360°
Next, you look at your business – all aspects of it – to identify every possible asset and every underutilized resource that could help you solve a broader customer problem in a meaningful, cost-effective way.
Here are two examples of firms that use assets from their operations, staff, equipment, and transportation, to creatively to deliver extra value – and a lot of it – at low incremental cost (these are not the actual names – the businesses did not want their strategies discussed publicly):
Southern Tree Services: When Southern goes out to a home to take down a tree, they arrive with disposal vehicles and a full staff of specialists (climbers, machine operators, helpers, etc) – none of which are all working at the same time. Southern uses these assets to provide a great extra service – a full yard cleaning with each major tree extraction. He does this for free, but it doesn’t cost him a thing, since the idle staff is already there, they have to do a lot of raking/sweeping anyway, and he has the disposal vehicles on-site. When customers are comparing companies who all charge about the same thing, this extra touch wins a lot of business!
Central Waterproofing: This company provides solutions that channel water out of damp or flood prone basements. To use a service like this, consumers typically need to empty their basement storage areas completely – a real pain and a barrier to usage, particularly to the customers who don’t have an immediate, emergency need. Central solves this problem for the consumer. Free of charge, they deliver a company-owned storage pod to the home so the homeowner doesn’t have to load their home with all of the basement junk. For a very reasonable fee, they also offer labor services (extra staff they need for peak demand) the day before/after to move the basement contents out and back in. The company does a wonderful job with service and warranty work which also give them a competitive advantage, but their storage/moving solutions have incented numerous customers to use a service that was otherwise just too inconvenient to consider.
Back Room Operations:
Most companies have untapped potential to add value from the administrative side as well. Other than credit/financing terms, which are very difficult to provide today, these are often the last places people think of for adding value. They can be critical differentiators!
Does your product or service involve delivery? If so, can you use simple systems and communication tools to reduce the delivery ‘window’ from the typical several hours to half-day to a half-hour or less? Careful scheduling, web-based mapping & traffic monitoring, cell phones and mobile email and texting are all being used to make deliveries as convenient as possible for consumers.
Does your product or service involve any type of regulation or compliance? If so, this means that there’s paperwork involved. Usually paperwork that your staff is much better at handling than the average consumer. Can you use standardized processes to remove the burden from the customer?
Does your product or service involve expertise that you can leverage in other areas? The obvious is hiring knowledgeable, customer-friendly staff in ALL administrative positions that can be enlisted to help a customer in need. The not-so-obvious is offering advice, know-how and recommended vendor lists to help consumers solve the full scope of the problems that are related to your services. This can be a web-enabled service, phone line, or even on-site follow-up consultation. Be creative!
Businesses lose customers every day because their value is not clearly understood. It’s very easy for the consumer to compare item prices. It’s not so easy for the consumer to be aware of, much less consider, all of the other things that could potentially drive value for all of the businesses that they could consider (convenient locations, deep inventory, expertise, etc). And no one understands the ‘extra’ 720° value because its not on their shopping list.
The obvious role of advertising/marketing is to make this value – anything that elevates you from price-item comparison – widely known.
While this shouldn’t come as news, the very real fact is that only a fraction of a business’ potential customers know enough about it to truly assess and rank its total value. Your customers may know about the value you create, but do your competitor’s customers? And if you deliver 720° value – the things that aren’t on their shopping lists – are you getting credit for this as well?
Look For 720° Value Before You Cut Your Price!
Finding ways to deliver and communicate more value to the consumer is a fundamental. The key is looking at your superior assets and your under-utilized assets to solve a wider scope of your customer’s problem. Initially, hone in on areas where you can build value without incurring major additional costs. If you see other points that are both valuable to your customer and within your core competencies, try charging for them – you won’t know until you try. And once you’ve discovered marketable 720° value, make sure it’s known!
The big idea here: look at your business twice, before you cut your price!