·
2 minute read
Value drivers are product or service features that improve the perception of the product or service a business is trying to sell and can help businesses grow substantially. Value drivers include technological features, brand awareness, and customer satisfaction. Value drivers are also what set a firm's product or service apart from its competitors, acting as a competitive advantage. Value drivers also give the added impression that a company's product or service is better than their competitors. Value drivers allow companies to influence their customer base to purchase their product or service. The distinctive traits that a business' product has will thus make said product look more attractive than its competitors. Once a company has figured out which value drivers boost its profits and its standing amongst competitors, it can use those value drivers to implement successful pricing increases.
Here are some examples of value drivers that businesses can take advantage of:
Customer Cost Enhancements
Competitors each have unique product or service features that separate them from each other. Unique features can be used to help the customers improve their cost base. If customers face lower costs from using your product or service, than that of the competition, then there is a significant value-driver. For a product or service feature to act as a strong value driver, it needs to serve a meaningful purpose for customers. Companies can also spend extra time improving upon certain features one of their products or services provides. This acts as a way for companies to look more attractive to customers because they focused on making sure their product or service worked efficiently before implementing a new feature.
Customer Revenue Enhancements
The other end of the spectrum is when the product or service allows the customer to increase revenue. This can be along the lines of being able to sell a higher volume, or charge a higher price, or both. PriceBeam's fact-based market insights about willingness-to-pay is a great example of customer revenue enhancing value drivers.
When it comes to buying psychology, while revenue enhancements can surpass cost enhancements, sometimes more care needs to be given about communicating revenue enhancements. It is often in the nature of the buyer to believe cost improvement arguments more easily than revenue improvement cases. This is where the marketing team must play an important role in developing the arguments and getting them across in a convincing matter.
Reputation / Emotional Benefits
Reputation is a value driver that takes time to build and is the largest value driver for businesses to incorporate. While a company's reputation isn't bound to one product or service provided, the products and services that a firm provide have a large impact on the company's reputation. Adding to that, a company's ability to build a solid rapport and deliver adequate customer service play a large role on how a company is perceived by its customers and other potential customers. A company's reputation also determines how price increases are received by customers. By building a strong reputation, customers are more likely to support a business when it implements a price increase.
Being able to build a relationship with a customer is an important value driver because companies make it clear to their customers that the company is serving their needs. A firm that takes care of their customers and understands the importance of serving their customers will see their customer base become more loyal to them in the future. Customers that are loyal to a brand are more likely to respond well to price increases in the future.
By establishing their product as superior to its competitors, firms can use this to implement successful price increases. Incorporating a successful pricing strategy means that companies need to constantly examine the market for any changes in consumer behaviour and demand so that they can capitalize on that before their competitors do. Utilizing value drivers effectively means that companies are also in the driver's seat when it comes to pricing their products. Establishing a solid reputation and delivering great customer service means that a company has a loyal customer base that is willing to invest in quality and a solid business model. Adding to that, customers that are truly loyal to a firm aren't bothered by a slight price increase as they know they are paying for a great product.
