Here Is A Challenge On Value And It’s Not About Money
“How would you change what you do if you had no choice but charge 10 times what you charge now?”. That was the question in a mind-opening discussion I participated in last week.
This is a question that can divide crowds. Some slam doors closed saying that such a thing can never happen, and others approach it with the “what if?” mindset and see a limitless scenario of options open in front of them. There is no right or wrong answer; there is only our imaginative power and capacity to remove those aspects of our work that decrease the perceived value of what we offer. In my little crystal ball, I saw a possible different future, and I liked it.
Wearing my winery co-owner hat, I sat with this question for a few days. It set my mind on a dream-like world where all the profit-driven thinking disappeared, and I started thinking of the value I would have to deliver for my customers. What would make them pay 10 times the price and still believe in its worth?
The questions that ran through my head were:
Would such a situation mean I would have to change my audience? If so, how would my new audience be? What are their beliefs? What are their worldviews? What are the things they value most?
Would my story change? Would I have to reframe my message to match with their values?
Would I have to change my operations from vineyard to their wine glasses? If yes, how would that look like?
Would I have to re-brand? Would I need to launch a new brand?
Would I have to change packaging?
Would I have to change markets? Would I have to focus on specific communities?
Would I have to change my services and tastings at the winery?
Would this be even possible?
As the days went by, I wasn’t looking at numbers; I was concentrating on my customers’ values and worldviews. Because those values are the ones that can help achieve, maybe, that theoretical 10 times more charge for my wines.
I also started asking more personal and emotional questions to determine the values of my customers. Are they status seekers? Do they want to belong and participate in communities? Do they want pleasure and adventure? Do they need to be reassured and feel safe about their choices? Do they want rich experiences to “look good” and earn status? Are they first adopters who need to be ahead of others learning new things? Do they seek fun experiences that allow them to express themselves freely? Are they romantics and are nostalgic of their youth?
All these questions define a specific set of values, needs, and desires that people care about. They also help reframe the concept of value. Would it be possible to charge 10 times more if our promise delivers on these values? Maybe yes, but the point isn’t to get to that theoretical number. The purpose is to shift mindsets and the way we are thinking about value.
To help frame this value concept better, The Elements of Value, by Bain & Company, is an excellent model. As explained in this HBR article, the Elements of Value approach extends Maslow’s insights by focusing on people as consumers, describing their behavior around products and services.
Amazon, for example, has redefined what consumers want and how they shop by concentrating and delivering on functional Elements of Value, such as “Reduces Effort” and “Avoids Hassles,” that matter most for consumers in mass retailing.
Another example, the life-changing element of “Motivation” is at the core of Fitbit’s exercise-tracking products.
You may ask why all this matters. It matters because according, to a research conducted by Bain & Company, Inc., strong performance on multiple Elements of Value correlates closely with higher and sustained revenue growth. That is, companies delivering on more value elements across the pyramid have higher revenue growth rates.
This is a significant point for two reasons.
First, if we started focusing more on drinkers’ values and less on our products’ or services’ features, we would engage more with the new generation of alcohol beverage drinkers. The media is full of well-informed articles about this topic; our industry should focus more on attracting new consumers through their values and offer them different reasons than tasting notes and exclusivity to drink wine.
Second, as an industry, we complain that we don’t have enough or make enough money. Compared to the beer and spirits industries, the wine sector is small and works with very different profitability. Ask a winemaker (not all, but the majority), and he/she will say that the margins they work with are too low. Ask a marketing manager, and he/she will whine about tiny budgets. Ask any agency servicing the industry, and they will reinforce what marketing managers say. Ask a professional writer, and he/she will also talk about the low remuneration compared to other industries. And finally, ask consumers, and they may say they prefer to pay the same amount of money for beer and spirits.
So, I guess we can agree that we do have a value problem. But we can work towards fixing some of these problems.
The Elements of Value offers a way forward in defining the values you deliver to your customers; and it also helps understanding if you should change anything in your business to provide more value to your customers.
So, let me ask YOU the question: “If you had to charge 10 times more for your product or service, how would you change what you do?”