What is your Value Advantage?
Value is commonly defined as a monetary quantity that is attached to an item, or goods and services. The lower the price, the better the value. Everyone enjoys a good deal, a buy one get one offer, or a 20% off coupon. We all like that because we feel we are getting more value for our money. If I can get more for less that is a good thing, right?
All businesses should want to provide value to their customers. However a low price is not the only way to provide value. In fact a low price is only one of multiple ways to provide value to your clientele. Let me explain.
In college I learned that all businesses are in business because they have some kind of an advantage, and each type of advantage provides value. Let’s take a closer look. Maybe a business is the cheapest provider of some particular goods or services, so they would have a cost advantage over their competition. Think Wal-Mart, their slogan is “Always the Low price, always”. The value proposition here is obvious. It is A Price Advantage.
7-11 is an example of a company with a different kind of advantage. Although they sell some of the same products as Walmart, and always at a higher price, customers still buy from them regularly because they have a Convenience Advantage. A quick stop and you’re on your way. They are providing value by saving you time.
A business could have a Quality Advantage like Mercedes-Benz. No one would argue that they are inexpensive, they provide value because they last a long time and are quite dependable. This is a Quality Advantage.
Some businesses have key innovations or a Technological Advantage that sets them apart from their competitors. Tesla is a good example of this. They own many patents in the electric vehicle field and are considered a leading innovator in the auto industry. Their value is their Technological Advantage.
A final example of a businesses advantage is Chick Fil A. They are well known for the high level of service they provide. Customers value this, and the restaurants are always busy. Customers are willing to overlook the long lines and premium pricing for the customer service experience they receive each time they visit. This is a Service Advantage.
It is common that someone will open a new trade service business thinking that they will get a foothold and grow the business because they are willing to work cheaper than everyone else. They will provide value by being the least expensive. They are employing the Price Advantage. They know instinctively that customers will at least give them a glance based on price alone, disregarding all other factors.
This is a short sighted approach. Price alone will certainly bring in some business. However, a business will soon fail if it is not earning enough to pay the bills and fairly compensate the owner. Money for repairing and replacing worn vehicles and equipment will not be there when needed. An owner may be tempted to compromise on quality by using lower quality, less expensive products, resulting in substandard work. Owners may also look to reduce cost by cutting corners on insurance or marketing and advertising for the business.
This approach will lead to a weak business that has little chance to blossom. An idea that began with great hope and enthusiasm can fizzle. The dream of ownership and independence can become a nightmare. Eventually, the frustrated owner may close down. At best, the business will limp along never achieving its potential.
A better way to operate your business and add value is to first understand clearly that a low price does not equivocate to Value. A company needs to operate with a Business Advantage that accounts for the true cost of running the business, providing a consistent quality customer service experience and a profit for its owner.
At Hole in the Wall, we have chosen to operate using the Service Advantage. We have learned that providing the highest level of customer service, using high quality products, maintaining a fleet of company vehicles and a professional staff is neither cheap or easy. However, this sets us apart from all of our competitors and has established Hole In the Wall as the value leader in the drywall repair industry.
A wise man once said “when you need to purchase something, buy the best you can afford “. In other words don’t make your purchasing decisions based solely on price. Instead, purchase based on the best value.
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