Increase Your Perceived Value; Increase Your Sales
The three most important aspects of business to focus on for success are marketing, perceived value, and sales, in that order. Does that seem backwards? I assure you, it’s not, and here’s why.
There’s no doubt that for a business to exist, it needs sales. Sales equal revenue, and revenue means the business can operate. In order for sales to happen, though, your customers need to perceive a value in buying your product or service. For your customers to perceive a value in your product or service, you need to communicate the value through your marketing. There’s an important caveat here: value does not equal lower prices. If you do nothing but compete on price, you are selling yourself short.
Have you ever looked a product or service and wondered why people pay so much for it? Is the product that much better? It might be made of slightly better quality materials, but people will continue to pay significantly above the extra cost for it. That’s the power of perceived value.
Perceived value is a powerful motivator to how customers view your product. The higher the perceived value of your product or service, the more likely customers are to buy, but not only that, the more they’re willing to pay! So, how do you influence the perceived value of your product?
Marketing Perceived Value
How do you use your marketing to increase your product’s perceived value? Increased value perception doesn’t necessarily mean making a more expensive product. Perceived value comes from several external sources, like the name of the product or service and how it’s presented. Possibly the greatest example of perceived value done well is (no surprise here) Apple. The iPhone was not a huge step forward technologically—other companies offered phones with the same capabilities—but the masterful way Steve Jobs presented and packaged it created a raving mad desire in the minds of customers. Apple is still able to conjure a cult-like desire for their products because of the perceived value.
Brian Wansink of Cornell University has spent his career figuring out how external cues motivate our behaviors, and you can learn from what he’s discovered about perceived value. Consider these examples.
Your Appealing, Descriptive, Exclusive Name
When Wansink was called to help an ailing healthy cafeteria, one simple change made all the difference—changing the food names to sound more appealing, descriptive, and exclusive.
Instead of Italian Pasta, we called it Succulent Tuscany Pasta. Or instead of Chocolate Cake, we called it Belgian Black Forest Cake, even though the Black Forest isn’t in Belgium. Once we added a descriptive name, sales jumped by 27 percent. And it’s not just that food. People rated the restaurant better and the chef more competent.
Wansink goes on to say people look for qualities that confirm their beliefs. If they think a product is going to be cheap, they’re going to look for cues that confirm it’s cheap, and vice versa for having a high value. Now, take a look at the name of your product or service, or even of your company. What are your names saying about your product? Are you letting people know it’s an exclusive, valuable product, or does it appear to be the same thing you can get elsewhere?
Presentation and Expectation
A potentially even more powerful external cue to value perception is the presentation. If you buy a product or service that is higher quality and more exclusive, you expect it to be presented in such a way. When a product is presented well, your expectation of value goes up, and you’ll look for qualities that confirm those expectations. Think about a service-oriented business and the simple external cue of how the providers dress. If they show up well dressed, smelling good, and acting cordial, you have completely different expectations than if they show up dressed sloppy, dirty, smelling bad, and are rude or dismissive.
Take this example from Wansink:
One week, we soaked all the labels off the wine bottles and replaced them with labels saying the wine was either from North Dakota or from California. They don’t even make wine in North Dakota. [. . . ] It was all the same $2 cabernet. And we found that if people thought it was from California, they rated the wine as better, they rated the food as better, they stayed at the restaurant about 10 minutes longer, and many of them made reservations to come back.
When we served them the North Dakota wine, it poisoned the entire meal. They didn’t rate the food as good, they left 10 minutes earlier, and they didn’t make reservations to come back.
Continuing the conversation, Brian mentions the “halo effect”, or how seemingly minor, unrelated cues can affect the enjoyment or value of a product or experience. Now look at how your product is packaged. Are you expressing value before, during, and after they experience the product? Are you giving them an expectation of value?
The power of expectation is immense. We did a study where we gave people a really good brownie on a napkin, a paper plate, or a really nice piece of Wedgwood china. And we asked what they thought of the brownie.
If they ate it on the napkin, they’d say, “Wow, this is really good.” On a paper plate, they said, “This is really, really good.” If they ate it off of Wedgwood china, they would say, “This is the greatest brownie I’ve eaten in my entire life.” And the amount they were willing to pay for it tripled.
Think about the implications of that last line. The same brownie presented in a completely different way meant people were willing to pay triple the price. They expected the brownie to taste amazing and looked to confirm that.
Take a look at how you’re presenting your product or service and how it might be affecting your customers’ expectations. Are you expressing a high quality expectation or setting up your customers to look for reasons why it’s cheap? Have you made changes that affected perceived value? Let us know your experience in the comments.
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