As a small business owner you know that your customers are the key your business? Now, do you really understand what is motivating them to buy from you? This HBR webinar on The Elements of Value aims to look at the values that influence a consumer’s purchasing decisions, albeit on a larger scale. Here at Change Connect we’re going to take make it relevant for small-business and see how you can put this concept to work.
First you need to understand what the Elements of Value are. I assume you are no stranger to Maslow's Theory. Let’s start with an example: online shopping. Have you ever used online shopping before? Can you think of why you chose to shop online instead of in a physical store? In many cases it is the convenience of having products delivered right to you, particularly for busy people, that influences the decision to shop online.
On the Elements of Value pyramid[1], online shopping can be attributed to a few different values: saves time, reduces effort, variety. This is one of many values, and a key lesson for business owners is to understand all the values in the pyramid and which ones you are offering to your consumers.
The pyramid is divided into four elements, and within each of these are the corresponding values, with thirty values in total. The “saves time” value falls into the Functional category, whereas another example in the webinar, Toms shoes, fell into the Social Impact category - customers feel good knowing they are helping someone in need when they buy a pair of shoes.
While very large businesses might hit many of these values (Amazon, for example, had eight in total and seven of them in the Functional category) small businesses should aim to deliver one to three values.
If you’re not delivering on even one value, you’re not in business.
So how does using this understanding of your consumers work for you? In a study conducted by Bain & Company, they found that companies that excel on multiple elements of value “crush it” on NPS and revenue growth.
So where to start with your business? The first step is understanding the values you currently have, and then recognizing the Elements of Value that the market leaders have - particularly the ones you aren’t delivering on. If there are two values you don’t have, that they do, look at whether you can add them to close that gap.
Once you level the playing field in terms of value offerings, the next big step is adding in new value propositions. This is a continuous process and a constant hunt for value. Any time you can add a new element of value, particularly one that is difficult for the competition to emulate, you are giving your business an incredible asset while simultaneously satisfying your consumers.
Remember that the key to success for small business owners isn’t what the consumers buy, but why they are buying it. By continuously adding to your Elements of Value, you are creating product / service differentiate between you and your competitors. Even if your business is small, these values are big.
What are some elements of value that your company currently has? What are some you are working on? Let us know in the comments.
[1] Chart - Bain & Company Inc. Source: The Elements of Value, September 2016, Harvard Business Review
