Have you ever read this?
‘True worth is determined by how much more you give in VALUE than you take in payment.’
This started me me thinking about exactly ‘what value is?’ How can I measure the value I offer? Is it a number, a price, a feeling, a perception or even an illusion?
Perhaps more importantly, how do I create ‘value’ and what price do I put on that ‘value’ when I have created it?
In this article, I explore what ‘value’ really means and whether it is just an illusion.
The Definition of ‘Value’
At the outset, I thought it was important to find a definition of ‘value’. In the Encarta dictionary ‘value’ is described as:
- Monetary worth – an amount expressed in money or another medium of exchange that is thought to be a fair exchange for something, or
- Worth or importance – the worth, importance or usefulness of something to somebody.
The first definition introduces the concept of ‘monetary worth’, but note the words ‘thought to be a fair exchange for something’. I ask myself ‘who or what creates the thoughts that something is a fair exchange?’
Is value just a thought? If so, how can I can I change someone’s thoughts about my products and services?
By giving something away – say my free e-book – does that mean it is value-less? Unless I articulate the value myself, my prospect may indeed think so.
In small business consulting we often say ‘the client will not value that which they get for free’. I think that’s usually true because I have observed that my clients are always more incentivised to implement my ideas if I ask them to give value in return.
The second definition introduces the concept of ‘the worth, importance or usefulness of something to someone else’.
The problem is, how do I determine what is, or is not valuable, or useful to someone else? Something that may be priceless to person A (- water in an arid desert -) may be worthless or destructive when offered to person B (- water in a flooded house)?
Of course listening carefully to my prospective customer is one way. But how do I place an accurate value on their ‘want’ without first knowing their precise circumstances?
Gary Halbert, the copywriting genius, put the problem this way:
‘The formula for business success is simple. Find out what people want and give it to them. But you must find out what they really want – not just what they say they want.’
Creating Value
It seems to me that ‘value’ can be created in so many different ways. Here is a list of just a few:
- Scarcity value – the law of supply and demand – food, water, air, a doctor – almost anything can be immensely more valuable when in short supply.
- Non-conformity – by being different in some way that is ‘valued’. As unique individuals, we may believe ‘authenticity is more valuable than conformity’ but what if we work on a production line where absolute conformity is required in order to create value?
- Emotional value – by generating an emotion – a story, for example.
- Relative value – this is where something seems more valuable than the alternatives available by being better, cheaper, faster or nicer.
- Experiential value – reading or hearing about something usually has much less value than actually experiencing it. Take holidays for example. The brochure simply does not offer the same value!
- Perceived value – value created out of thin air by skilful marketing.
From reviewing the list above, it seems to me that the ‘price’ we attribute to a product or service is often totally subjective and that ‘value’ is almost always created in the mind of the beholder.
So perhaps the purpose of ‘marketing’ is to create value by promoting the worth, importance and usefulness of our products and services i.e. to change how others think about them. If this is so, the actual value generated has more to do with perception than reality.
It is absolutely incredible to me to contemplate that Vincent Van Gogh failed to sell even a single painting during his lifetime. He was no doubt clueless at marketing. Ironically it was only his death that created scarcity value. (In 1987 Van Gogh’s ‘Vase with Fifteen Sunflowers’ sold for $39.7 million, or $76.6 million in 2010 dollars. In 1990 another painting, painted in 1890, sold for $82.5m, or $138m in today’s currency!)
So it’s also worth bearing in mind that the passage of time may also create (or destroy) value.
Does Value = Profits?
Is the ability to generate profits a measure of the value created?
I don’t think so – poor old Vincent never turned a profit in his lifetime, mainly surviving through the generosity of monies given to him by his brother!
And what about the huge banking ‘profits’ generated in spite of the eventual massive destruction of shareholder, customer and taxpayer value?
‘Profits’ may not always be a reliable indicator of value creation after all.
If value lies in delivering my product into the hands of as many customers as possible, then value might indeed lie in my delivery channel or systems, rather than the product itself. Few would argue that a lot of the value in a McDonalds franchise lies in its systems and not the quality of their food.
- Does this deliver more value?
A Difficult Concept to Nail Down
I think you’ll agree that value is a difficult concept to nail down and yet our ability to create it, and deliver it, may be vital to well-being and our perception of self-worth.
Indeed, it seems to me that there may be huge value in failure if I only look for it. In fact, failure often removes the barrier to realising something better – the banking crisis for example, could it turn out to be a blessing in disguise?
Even just a little bit of thought makes me realise just how many things of value are built on a mountain of so-called failure.
Every experience I have had, good or bad, has had some value – sometimes it just takes a little bit of time for me to realise what that value was.
Indeed, it is liberating to think that every bit of training I have had, re-packaged by my own experience, potentially has value for someone else.
So is value just an illusion?
I believe that largely depends upon our perspective.
I may be able to bring someone’s perspective into sharper focus but ultimately it is an interesting fact that what may be viewed as ‘worthless’ by some, may equally be viewed as ‘priceless’ by others.
Perhaps all I need to do to be successful in business is to find the people who are looking through the same ‘lens’ that I am (or help them to adjust their focus until they do.)
Could I improve someone’s life in some way – even if it’s just by sharing my experience?
Could it be that marketing has more to do with perception than reality?
It’s immensely valuable just to accept that as a possibility. You see it removes any lingering self-doubt that ‘I may have nothing valuable to offer.’ It opens me up to the possibility of ‘conjuring up’ even more value just by changing other people’s perceptions about things that they may have otherwise overlooked or taken for granted.
By digging deep and finding the ‘value’ that I offer, and helping just one other person to fully appreciate that ‘value’ through my marketing, I can build my business from there?
After all, it seems to me that value may have lot more to do with perception than reality. If you would like to change your customers perception of your business, and the value it offers, then contact Mark for a free consultation about how he can help your small business marketing campaign or why not subscribe to his Newsletter in the side-bar?
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