There’s more to creating value than adding features and functions to your product.
A lot more …
Today people have so many choices between comparable products and services that feature functionality is the minimum requirement for consideration. It takes greater value than that to make a difference they care about.
The value equation has shifted from features and benefits, to experience and identity. Now people care less about what a product does and more about how it makes them feel to use it and to have it.
That makes creating new value a challenge. But there is good news for product marketers.
Turns out there are many ways to create value that people care about.
Consulting firm Bain & Company has shared the results of three decades of customer studies that identify 30 elements of value customers care about most. The elements are broken into four levels of human need based on Maslow’s Hierarchy of Needs:
- Functional – what does it do?
- Emotional – how does it make me feel?
- Life Changing – how does it change my life?
- Social Impact – what is the value to society?
Not surprisingly, Bain’s research found significant benefits to analyzing value in this way. In general, more value elements link to higher perceived value by customers, higher brand loyalty, and higher sustained revenue growth for the business.
That’s not all.
The research also offers insights into which elements are most important. For starters, it found that no combination of other elements can make up for a shortfall in functional quality. Before you can ascend to higher levels of quality, your product or service must meet minimum baseline requirements.
But ascending the value pyramid is the way to win the hearts of customers.
Companies that scored high on the emotional elements have higher Net Promoter Scores (which drive customer loyalty and referrals) than those that scored high on functional elements alone. So the higher up the value pyramid you go, the more long-term value you create.
The power of intangible value
The Bain research helps to underscore the importance of creating value for feelings and not just function.
People expect products to be functional and useful. But they pay for intangible value, for what they experience and what they care about.
Trader Joe’s is an example of a brand that has succeeded in creating value by combining functional and intangible elements in unique ways.
Unlike ordinary grocery chains, Trader Joe’s elevates the food shopping experience from a chore to a cultural experience. It stocks low-cost, organic, exotic and cultishly popular products that can’t be found anyplace else.
Anyplace else would also be bigger and more impersonal. But Trader Joe’s has a small store vibe with its South Seas décor and Hawaiian-shirt clad employees who delight in serving customers. Every employee knows the whole store and will personally take you where an item is when you ask.
You don’t have to look far to see several elements of value at work: quality, variety, reduced costs, sensory appeal, simplifies, fun/entertainment, nostalgia.
This has set Trader Joe’s apart in a competitive market. For three years running it has been ranked America’s favorite grocer in terms of customer satisfaction and likelihood to refer friends to the store.
Thinking beyond features and functions offers you many ways to create value that people actually care about. But the starting point is to find out what makes customers feel good. Then do that.
[BONUS: We recently talked about the elements of value on The Heart of Marketing podcast. Listen in to learn how you can combine them to add value to your product or service.]