People + Process = Performance

Archive for month: October, 2016


Added Value or Value Added

Is there a difference? Probably not. The message marketers are sending is the same: They are trying to convince you that you’re getting more than you expect for what you’re going to pay.  Both consumers and business buyers want ‘bang for the buck’ and everyone appreciates something extra without spending more.

First, let’s define value. Value is a perception of what a product or service is worth to buyers at a particular point in time. This perception is driven by needs and wants; buying motivation.  For example, a First-Aid kit is probably worth more when you’re bleeding than when you’re not. And if you’re dying of thirst, you’re probably not going to try to negotiate the

price of a bottle of water. Value establishes what the market is willing to pay and helps explain why consumers flock to buy highly anticipated or

promoted items (think iPhone 7) – and even pay more than MSRP when those products are in short supply.  It also explains why you can find slow-moving products at deeply reduced prices (think BIG LOTS).  It’s all a matter of market value.

The first step in selling value added is to define value in the buyer’s terms [1]. Then decide what you want to add to the basic product or service to give buyers more than they expect.

Lagniappe [lan-yap] is a great term that originated in Cajun country. It means ‘something extra’ – a small gift given to the customer with a purchase as a compliment – an unexpected benefit.  I’m reminded of when I bought my first set of Cooper Zeon high-performance tires; not only did the dealer give me a great price, he gave me a free beautifully embroidered Cooper Tires baseball cap!

Value can also be added at different stages in the manufacturing or distribution process. Steel service centers add value by cutting, shaping and finishing raw steel into sheets or bars used by manufacturers. These materials have greater value to buyers because they save them time and money compared to dealing with huge coils from the steel mill. Tech companies and professional service providers add value by giving customers access to special features, information and updates through downloads, conferences, forums and blogs like this one you are reading.

Added value is something customers get without incurring additional cost. Bundling is a great example that combines different products into a single purchase – at an overall lower cost than if each product were purchased separately.  Others are:  ’Buy 3 tires and get the 4th tire free’, ‘Order by 5 pm and get free shipping’ or “We pay the Sales Tax”.

Value Added or added value describes the feature, benefit or advantage – something extra –added to a basic product or service. You can add value by enhancing the appearance, serviceable life or ease of use of your product or service. Taking steps to change, improve or increase a product’s value will make it more accessible to a greater number of buyers’ needs. If your product provides
customers with an advantage that enhances their business system – and improves the output of their business – then you have added value.[2]

And here’s a point to remember: Don’t subtract value – I’ll cover this topic in another blog.

[1] Value Added Selling Techniques by Thomas P. Reilly, Motivational Press, St.Louis, MO, 1987.

[2] Managing for Value by Bernard C. Reimann, The Planning Forum, Oxford, OH, 1987.

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