Diamonds and Coal

Recently I’ve been reflecting a lot on the surveys of business owners we’ve done over the last decade.

A common issue that stands out in these surveys is the fact that few business owners really understand their place in the world, and the value they deliver to their clients.

Too few business owners are surveying their customers and prospects enough, and are often unaware of how they compare to their competitors in the market in which they operate.

So I thought I’d share a few thoughts on why you really must have an idea of your value.

Did you know that diamonds and coal are made of the same stuff – carbon – and yet both are valued entirely differently. One is hundreds of dollars a tonne, and the other can be tens of thousands per gram.

It’s the same with business.

Value is in the eye of the beholder but it has to be well-communicated, and it has to match what the customer is looking for.

In some businesses, speed is important, think fast food, in others not so much, think crafting a violin. In some, the packaging is important, in others it’s only what is in the box that is important.

Often we focus on the wrong thing in business; we’re worried about the product or the money, but in fact, it’s neither of these that is the really important part of the transaction.

It’s the value exchange that really counts for long-term success.

If you’re able to deliver a perceived value higher than the money the customer pays for your product, then you will be valued. If you don’t, you won’t. It’s pretty simple, isn’t it?

When a market becomes commoditised, and prices get driven down, it’s simply because there is no value difference seen by the customers between alternative suppliers of the product, so the only way for them to differentiate is by being the cheapest.

But even in commodity markets, it is possible to differentiate on other things, like the speed of service, or delivering on time, or by connecting the purchase to a social cause.

I’ve seen entirely commoditised products suddenly see enormous sales growth through a new way of communicating value. I’ve seen once highly valued brands lose their value through a sudden change in demand.

It pays a business owner to be on top of what customers value, and how your product or service meets and exceeds that required value.

If you lose sight of what your customers value, chances are you are heading for a catastrophic change in your business.

So, keep an eye on value at all times, not what you think is valued, but what ‘is’ valued by your customers and prospects.

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