Maximize the Value in Your Business—Part II of III (Value Creation)
Give more to get more? Learn how businesses are using value creation to drive their businesses beyond the competition and why you should make it a priority in your business.
This post is part of 2 of a 3-part series. For part 1, click here.
Last week, we looked at how you can identify and capture maximum potential from prospects, existing customers, technology, and employees through Value Extraction. This week, we wanted to focus more on how creating value can benefit your business.
Value creation is a model that generates value in the eyes of your customers beyond the physical sale of your product or service, and should continue to grow over time. In terms of what we want to focus on, we are referring to a broader theme of providing solutions for customers’ perceived needs, while simultaneously adding some additional benefit to their lives. To understand this concept better, we must understand what drives value.
Value drivers are activities or areas of focus that enhance value in the eyes of the consumers, thereby creating value for the company offering the product or service. These drivers could be technology related, convenience, reliability, customer service, or other benefit. It’s important to note that while some value drivers, like technology, have physical connotation, ALL value drivers lead to intangible benefits in the eyes of the consumer AND in your business.
We define intangibles as the abstract principles associated with creating value for your customer, such as trust, customer referrals, brand loyalty, etc. By this we mean that spending time or money to acquire a customer does not necessarily have to reflect a direct monetary gain for it to be effective. The purpose of these intangibles is adopting a long-term vision for your business so that you can properly align resources for its growth. Intangible benefits are often denoted by indirect benefits and the link between these indirect benefits and value creation is made through effective strategy and goal creation.
Value creation should be the first priority for all entrepreneurs, because it sets the tone for your business and prevents short-sighted rewards from influencing long-term decisions. It’s the nucleus of your entire business. If your customers value impeccable quality and beautiful design, then the skills and processes to produce such products are of high value to your business. You wouldn’t risk your reputation on creating mediocre products with mediocre parts, just to save money in the short run. However, if your customers value price, spending time and money on highly-involved processes might not be the best idea if it’s going to drive your costs up. The idea is that your value proposition is a proposition to the target customer, not your business, meaning that you should have a customer-centric focus from the beginning. If you can adopt this attitude and practice from the onset, your business has a much higher chance of being successful.
Next week, we’ll wrap up this series by showing you how to use value extraction and value creation to maximize value in your business. As always, we encourage your comments below and if you liked the post, please share it with those who you think might like it as well. And if you’re looking for exclusive offers, online business tips, and more, be sure to sign up for our free newsletter below.