Despite our best efforts to define and quantify value, the process of valuation remains very subjective. There are standards that can be used to quantify the economic value of an asset (normally based on the cash flow that the asset can be used to produce over a certain period of time), but there is no standard for desirability. A free market economy sets a standard for the value of any product or service based on supply and demand and how much any individual or organization is willing to pay for it. What is highly valuable to one, though, might not have the same appeal to another. The reason for this is very simple . . .
Value is in the eye of the beholder, and each person perceives it differently.
Not just every company, but every person within every company has his or her own unique perception of value. That perception has been established over a period of many years by their own set of beliefs, their background, their upbringing, their education, and their experience. It is further colored by their perspective from the position they occupy. Their individual roles and responsibilities can cause them to see value in a completely different way than someone filling a different role.
When a company is faced with a complex buying decision that may involve multiple decision makers and influencers, it is actually the collective perceived value of all the individuals involved in a decision that will ultimately be weighed against the money we ask them for. A design engineer, for example, may perceive our solution as a means of improving his ability to collaborate with the manufacturing department, thus making his job much easier. His perception of value will be combined with that of the controller who may see our solution as an unnecessary luxury and an unjustified expense. The collective perceived value is based on the average perception of all of the people involved.
A perception of value is not static. It changes over time, and it can change rapidly with the introduction of new information or when framed in a new context. This means that a person’s judgment and decision-making criteria will be different based on each judgment or decision they are faced with. The reasons they decided to buy or not to buy a new piece of manufacturing equipment yesterday will probably be entirely different from the criteria they use to decide whether or not to hire three new office temps today.
What we need to know is what constitutes value to them right here, right now, on the particular project or decision at hand. Research can give us clues, but to get a real understanding of how your customer sees value, you’ll have to ask them some questions.
In What Customers Really Want we talked about asking your customer questions to discover more than just their needs but also their desired results. We also talked about the questions that reveal both their desire to leave point ‘A,’ the current state your customer is in when you find them, and what drives them toward ‘C,’ their desired future state where they have achieved the results they are looking for. Now, we will turn our attention to what point ‘C’ actually means to your customer and what value they hope to derive when they get there.