In marketing, from product development projects over pricing to digital conversion, we must think customer value. If the customers don’t see a value exceeding their investment, they will simply not buy.
Customer value is often confused with extra investments and extra cost. Sometimes it might be so, but many times it is a matter of understanding your customers perception of your offering.
Do you for example know why McDonald’s is not including coffee in their meals? Talking to customers they understood that only 30% of the persons buying a meal wanted to have coffee. Including the coffee, even if it was “included”, made the whole deal perceived as more expensive.
Many B2B companies who offers service agreements, load their “gold” offer with everything they can think of to make it seem more valuable. It can backfire if customers don’t need alla functions and thereby be perceived as unnecessary expensive. So, why don’t let customers decide and pick the components they value in the agreement?
Often value is about mitigating risk. Different forms of guarantees often makes the offer seem safer, but it can also be a product differentiation that motivates a higher price. Before 2022, Postnord offered A (Priority) and B (Economy) post. The price difference of roughly 50% was motivated by a 1-day delivery guarantee for A post and a 1-3 day delivery guarantee for B post. All post was transported and delivered in the same system, but if it was really important to get your mail delivered, you gladly paid for the guaranteed delivery time.
Strong drivers are often, even in B2B, emotional factors like prestige and community feeling. Most people like to show that they are smart and successful, enjoy a personal benefit and are prepared to pay for it. Think about how many arguments that has been used to motivate Business instead of Economy when flying.
One fantastic case involving an objectively irrelevant driver was a product development case for Rapid Granulators. Rapid offered a granulator model with hardened parts to handle extra tough materials. We asked how you could see it on the granulator, which you only could if you read the spec plate. We proposed to paint the granulator in silver, add a huge sticker with “PowerTech” as a technology brand name and increase the price with 30%. Customers loved it, and sales increased by several hundred percent. Customer used it for the applications that needed the function, but also for many other applications “just to be sure”. Same product, totally different perception.
Final example from the World Cup: Colombia’s official jersey costs around $150 – roughly a quarter of an average monthly salary in the country.
Together with their sponsor, the beer brand Águila, they developed a great idea: let fans add the Águila logo to the official shirt in the size they like. The bigger the logo, the cheaper the shirt – down to $20 at max size. Huge interest, 10,000 shirts sold, happy customers – all presenting the brand in a proud and very cost-effective way.
And if you want to discuss communication, you are always welcome to contact ulf@sfinxconsulting.se
