From now on, look at every major business decision through a new lens – a customer value lens. If you continue to provide increasing levels of value to your customers that they’re willing to pay for, your profits will increase. And you will gain market share. In effect, you will be building higher walls around your business by innovating in areas that directly drive customer value. Warren Buffett only invests in companies that successfully create a moat around their businesses to block competitors. When you start building extreme value in your business, your customers will begin to notice and your profits will begin to rise.
Customer value comes in all shapes and sizes including: unique features, reliability, risk management, persistent adherence to specifications, timeliness, consistency, affordability, convenience, and providing value to your customers’ customers. Basically, value is what your customers define it to be, so ask them. Take the time to get to know their business needs. Identify the major pinch points in their businesses as they relate to your offerings. Look for gaps in their processes that slow them down and cost them money and identify where your products might assist.
The goal is to move away from competing on price, as far away as possible. You offer a unique package of customer value that is like no other, right? It’s important to have competitive pricing, but not to compete in the lowest price race to the bottom. Commodity markets are best left to the pros. You want an undisputed competitive advantage for your business. You want an advantage that is sustainable. If you don’t have one, now is the time to create one.
As you can see, value creation drives what successful businesses do. Just as important, it drives what they don’t do. Take a look at the myriad of activities that you’re doing every day in your business. Step back and take a cold, hard look at where you and your team spend most of your time. You might be quite surprised at the huge amount of time spent on low-value activities. Just because you’ve always done something doesn’t mean that it’s immune from the value creation test. What you assume they think is important might not be, and vice versa. This exercise can be a real eye opener for small business owners. After reaching out to their customers, many businesses adopt a whole new strategic focus based on frank, detailed customer feedback. Once again, the best way to find out what customers specifically value about your business is to ask them.