Magazine article CRM Magazine

Do Your Customers See Your Value? Organizations Must Show the Value of Their Offerings If They Want to Command More Than a Commodity Price

Magazine article CRM Magazine

Do Your Customers See Your Value? Organizations Must Show the Value of Their Offerings If They Want to Command More Than a Commodity Price

Article excerpt

STRATIVITY Group's recent Global Customer Experience Management Study revealed to us that 50 percent of sales professionals cannot justify the prices of their firm's products and services.

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Instead, salespeople often blame their discounting on the customers' demand for lower price. But why are customers asking for lower price? The easy answer is, because they can. The real answer requires a deeper look at the value organizations deliver.

Many businesses and customers fail to fully appreciate the value of what they purchase, and as such they ask for a discount. They do not see the clear correlation between the value delivered and the price they are being charged. This is the essence of commodities. If customers fail to see value, they regard your products or services as commodities, easily replaceable by other similar products.

Commoditization was accelerated in the past few years as companies reduced their total value through cost-reduction efforts. Delivering more vanilla and uninspiring--a.k.a. boring--products and services, companies signaled that their products are not worth the money they ask for them.

The problem is even more acute in certain industries where comparison is complicated (wireless phones) or the product is intangible (insurance or banking). In those cases the burden is on the vendors to create new tools and methods that will demonstrate to the customers the value provided.

Organizations need to help customers visualize the value they deliver to customers, who will in turn appreciate the overall experience. This appreciation will translate to a reduced churn rate and premium prices, if the value visualization is correctly executed.

Visualizing value is a serious challenge, especially in today's overcrowded marketing-communication world. Customers often cannot tell the difference between products, and companies do not demonstrate a clear enough differentiation to justify a premium price. …

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