The Value Scale™
We like to describe the concept of value using the analogy of the old-time apothecary scale…in this context, we call it The Value Scale™. As buyers each of us has a Value Scale in our heads, and this Value Scale has a good bucket and a bad bucket. In the good bucket we put the things we like about our buying relationship (great product specifications, a brand that makes me look good, a trusted partner, friendship, etc.). On the other side of the Value Scale is the bad bucket and in it we put things we don’t like (the price we pay, wait time, hassle, political risk, etc.).
- If the good bucket weighs more than the bad, we believe we are getting value.
- If the bad bucket weighs more than the good – we believe we are not getting value.
Each one of your buyers too has their own individual, unique Good buckets and Bad buckets in their heads, and they are constantly weighing these buckets against one another to determine if they are receiving value from their relationship with you.
Interactions your buyer likes go in the good bucket, experiences they don’t like go in the bad bucket. In fact you can imagine every time your client has a good experience with you, they drop a “rock” into that good bucket – the better the experience, the bigger the rock. Of course if they perceive that the experience was not what they wanted then you get a bad bucket “rock” – the worse the experience the bigger the bad bucket rock.
When we lose a client all too often we blame it on price “…the competitor bought the business” is the typical response. I’m here to tell you it’s almost never about price, it’s about value. Price is one component – its bad bucket rock – and the higher your price the bigger the bad bucket rock, but as we’ve discussed the bad bucket is only part of the value scale. As the bad bucket gets heavier the more you have to include in the good bucket. For example:
- Is $35,000 too much to pay for a new car?
- Is $92,000 too much to pay for a new car?
- Is <insert any price here> too much to pay for a new car?
The obvious answer is “it depends” – what’s under the cover? What do I get for my price? Am I buying a Kia or a Mercedes? Let’s go back to our Value Scale:
- The Kia bad bucket is only $32,000 and offers a basic set of good bucket product, brand and sales equities.
- The Mercedes has a big $92,000 “rock” in the bad bucket but offers many substantial good bucket product, brand and sales equities such as a powerful engine, a navigation system, “”, that impressive “three pointed star” hood ornament, a great buying experience led by “competent and savvy German sales team”
I would argue both offer “fair value” – the Kia doesn’t promise a lot and doesn’t cost a lot. The Mercedes promises a lot and costs a lot – the good and bad buckets are well balanced. Hence both products land in the “Fair Value Zone”:
There is also a “great value zone” – when a large share of the market perceives great value. In this case they buy, and re-buy, and refer their peers and friends. What does a “great value” look like in sedans? As evident by the number of units sold it looks a lot like a Toyota Camry and a Honda Accord. Both the Camry and the Accord are considered great values (in the green zone). A large group of buyers perceive that these two vehicles offer significant good bucket (what they get) for the bad bucket required (what it costs).
Of course if there is a “great value” zone there is also a poor value zone. Several car models have found themselves in this zone and consequently buyers do not buy. The result? Those relationships eventually faded away.
Three Options for Changing Your Value Scale
When you think of your top client’s perception of you, is the value scale tilting in the Good bucket direction? Or is it neutral? Or is it tilting to the Bad bucket side? Are you perceived to be Great Value, Fair Value, or Poor Value?
So, if you find yourself in the poor value zone you have three options:
- You can take rocks out of the bad bucket (e.g., lower your price, reduce risk, eliminate hassle),
- You can put rocks into the good bucket – (e.g., get the buyer to appreciate all aspects of the product, brand and sales equity you offer), or
- You can do both
Price is obviously a bad bucket rock, and the higher the price, the heavier the Bad bucket rock. But if you’ve been filling the client’s Good bucket all along so that it weighs a lot more than the Bad bucket, they will perceive that they’re getting great value. They will be willing to pay a higher price.
Learn more on our sales training