Challenge # 2: Recognising that people’s perceptions of value are constantly changing.
Would you believe it? You find out in one meeting what the customer appears to value only to find out at the next one that it’s all change! What is going on? The problem is that people’s perceptions of value change depending on location, situation, timing, state of mind, priorities etc. If they didn’t why would anyone pay £2.50 (and the rest!) for a Coke in an hotel when it’s only 40 or 50p in a store? In a word – or two …location and situation. It’s amazing how the mind works. I’ll resent paying £1 or more for a bottle in a motorway garage but not worry about paying £2.50 in a nice bar – at least not worry too much.
The Price of a Watch – Changing Perceptions in Action!
When my daughter left university she went to work at a high class jewellery store as she thought about what she really wanted to do (she’s still thinking!) I gave her a call after her first day to find out how she had got on. “The prices are disgraceful”, she told me. “The cheapest watch in the building is £250 and we stock watches up to £10,000. £250 for a watch is a disgrace at any time, never mind when times are hard”.
A month later she was at our house for dinner. During the evening she turned to me and said “Whatever you do, make sure I don’t buy a watch from my store”. I suggested that that seemed unlikely given her views about how extortionate the prices were. “Well, to be honest”, she said “I did think that £250 was a lot for a watch to start with, but now I realise it’s actually very cheap!”
So it’s cheap now is it??
“What? – How come they were extortionately priced a month ago, but now they’re cheap?”
The answer, of course, is changing perceptions. When she first started, she compared the £250 watch with the watch that she was wearing – a very cheap, functional student watch costing a few pounds. Compared with that, the £250 watch was expensive. A month later on and she’s now comparing the £250 watch, not with her cheap watch, but with the £10,000 watches she also sells – compared with them £250 is cheap! So when you – or your customers – compare your prices, are you comparing them with the student watch or a top of the range £10,000 version? It makes all the difference to their perceptions!
At Axia Value Solutions we help our clients defend and grow their margins and build profitability. We do this by helping them to reach a deeper understanding of the value of the solutions they deliver to their customers and through that understanding enable them to differentiate, price and communicate their offer increasingly effectively.
Axia Value Solutions – Value through Understanding
For more information you can contact Mike and Harry at email@example.com or click on the “Let’s Talk” link on the website www.axiavalue.com