Getting Value Right

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Getting Value Right

The key is knowing what your customers want and need from you

When you run a business like a furniture store, your job is to produce and sell value. It’s both as simple and as complicated as that. When I see businesses getting value wrong, I have a physical reaction to it—it’s like watching a starving person eat cardboard. So that’s what we’re going to focus on this month: Getting value right. Because if you can do that, you can make money.

Let’s start with a few examples.

Getting value wrong

I was in a family-owned store, consulting with them about how to make improvements to their business. Their traffic is down to almost nothing, sales have declined for five years in a row, and the staff morale is abysmal. When I asked the buyer and store owner to explain their merchandising strategy to me, they focused entirely on price. Or, specifically, low prices.

“The big boxes and online retailers are kicking our behinds on prices,” the buyer said. “We’ve done everything we can do to lower our prices, but we just can’t compete at that level. They’re obviously buying a lot better than us.”

I don’t need to tell you that when you drop prices and your traffic drops, the only predictable result is that your revenue goes down. Even if your traffic stays the same, if you drop prices and do nothing to increase the number of purchases, your revenue goes down.

In this store, the merchandise looked very similar to what the merchandise would have looked like 15, 20, even 30 years ago. Lots of classics, lots of bread-and-butter. Nothing new, nothing exciting.

This is an example of getting value wrong. The assumption this store owner made was that the only value his customers wanted was low prices. He didn’t ask them. He was reluctant to invest in new products that are more exciting, fresher, and unlike what’s offered at the big boxes and other discount outlets. Low prices aren’t the only value customers want, and had he discovered a different value proposition to offer, he could have actually grown his business. So, we’ll work on that now.

Getting value right

One of my first jobs was at a major advertising agency, and I’m pretty sure this was the experience that taught me about value. I was in a meeting with my project team discussing an unhappy customer. The project manager was leading the meeting, and our vice president was attending. The project manager kept talking about how to “showcase the numbers.” He spoke of using the most positive data, reflecting the highest possible viewer statistics, and painting the rosiest picture we could to help the customer see how much impact we were having.

The vice president—a guy who never spoke very much—finally asked, “What does this customer really want?”
The project manager never hesitated: “Great service and great advertising!” he said.

“No,” the vice president said. “He wants sales. And all the inflated statistics in the world won’t make sales happen. What we need to do is give him a campaign that drives sales. Then he will be happy.”

It’s easy to get lost in the details of our businesses, but value comes down to a few simple things:

  1. Know what your customers actually want and need from you.
  2. Give it to them—in the right way and at the right (which isn’t necessarily low) price.

Of course, these two concepts are simple, but their execution is not. What people want and how to deliver it can be very nuanced, and it is ever-changing. If you keep these two points top-of-mind at all times, you will find they will guide your furniture store in new—and possibly unexpected—ways.

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