Without a product or service that offers value to its customers, a company can not and will not be successful. Value is a combination of 3 factors which are known as the Customer Value Triad - quality, service, and price. Consider what happens as each of these 3 factors increase - 1. Increased quality increases Customer Value 2. Increased service increases Customer Value 3. But Increased price decreases Customer Value Because of this relationship, we can think of Value in terms of a mathematical equation: Value = Benefits / Costs So, it's actually a ratio between what a customer gets (the benefits they receive) and what they give (the costs they pay). Possible customer benefits can be either functional or emotional or both. And the possible customer costs can range from psychological costs to money, time, and energy spent acquiring the product or service. But how do we know what will be a benefit to a customer? Understanding their needs and wants can be complicated, because many customers really don't know what they want, or even know what is possible to want. The language customers use to describe needs may be unclear to marketers. How do you interpret the words inexpensive, pretty, or powerful, for example? These are subjective ideas that need much more clarification to actually be incorporated into a product or service. Marketers have found something very interesting, however, in the general types of needs that customers have: 1. Stated needs - these are the literal words communicated by the customer. For example, someone in the market for new flooring may say to a salesperson, "I need an inexpensive carpet". 2. Real needs - these are the actual functional needs of the customer. The flooring customer really wants a carpet that will resist stains and look good for at least 3 years. 3. Unstated needs - these are the expectations of the customer. The flooring customer expects to get good installation on any carpet they buy. 4. Delight needs - these are the wishes of the customer. The flooring customer would like to get quick delivery of their new carpet. 5. Secret needs - these are the unconscious needs of the customer. The flooring customer would like their friends to think they got a really good deal on their new carpet. Simply selling customers what they say they want isn't enough. Maybe you've heard the saying "buyers are liars". This isn't because companies or salespeople don't like buyers - of course all businesses love their customers! The saying "buyers are liars" refers to the fact that the majority of customers can't know everything about a product. So when a customer who walks into a floor covering retail store says, "I need an inexpensive carpet" - what they probably mean is that they want a carpet that brings them good value. My point is that solely relying on a customer's stated need could easily shortchange the customer. To be the best in any market, a company must help customers learn what they want. This is done by effective sales and marketing at every level of the organization. At the heart of any company's marketing, they must communicate the answer to 4 key questions. This is because the customer is asking themselves these 4 critical questions- What are you offering? What does it cost? What does it do for me? Why should I trust you? You must be able to easily answer these for your customer in order to sell any product or service you offer. "No matter how good you get you can always get better" -Tiger Woods
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