“Price is what you pay; value is what you get,’” billionaire Warren Buffett has famously stated, attributing this knowledge to The Intelligent Investor author Ben Graham. “Whether we’re talking about stocks or socks,” he says, “I like buying quality merchandise when it is marked down.” And hey, who doesn’t?
Most consumers aim for quality goods at a reasonable price. And we are fortunate enough to live in an age where we can research, access information, and shop, literally, from anywhere. Sounds great, right? Well, we may soon discover that limitless choices can be overwhelming, and pricing sometimes confusing. Not to mention the distractions of competing Web sites, user comments, and ads that pop up while browsing. Too much data can easily leave people frustrated and ready to head straight to the mall for a good old-fashioned shopping spree. But in today’s busy world, not everyone has time for the mall. And besides, you may not be there at the right time to grab a real deal; even on sale, you may not feel as if you came away with the best value.
This is where value-based marketing comes in, as it takes on the challenge of connecting with an audience in a meaningful and unobtrusive way. But what is it, exactly? According to the wiseGEEK research team, “Value-based marketing is the process by which a company attempts to gain the maximum impact from its marketing strategies and initiatives. …[It] is all about getting the most from a marketing budget.” Today, the researchers say, marketing is a powerful tool from which most income is generated, and value-based marketing initiatives must be focused and consistent over a period of time. Through consistency, it will build up a brand that resonates with consumers. It’s important to note, however, that the campaign will only be as effective in creating value as the product being offered. Not surprisingly, the best value in marketing may be by simple word of mouth!
Creating value in marketing is challenging, but possible. “Today, marketers have to operate on a peer-to-peer basis, because they’re not just competing with each other for attentions, they’re competing with everything,” said Jay Baer in a recent Chief Marketer article. The author of Youtility: Why Smart Marketing is About Help, Not Hype, Baer says marketers must be useful if they want to connect. “Create marketing so useful that people would pay for it, marketing so good it could be a product unto itself,” he says. One way Baer says this is possible is by creating apps offering tutorials; the customer learns about a particular (brand-related) topic while also keeping the brand in mind (e.g., camping tips, by L.L. Bean).
Another challenge: measuring the value of marketing during a specific financial period. B2B and digital marketer Eric Wittlake says there are two things you can do to help you find this value: Track the right trend, and test the trend. In regard to tracking, did the trajectory of your business change in relationship to your company’s success? Wittlake finds the following metrics more helpful than revenue trends: branded searches (e.g., by Google Webmaster tools), direct website visits, and market share.
There are also ways to test the effect that marketing has on your change in business; depending on your type of marketing, following are ways to consider these test and control groups: isolating individual markets, splitting a company list, creating a digital advertising control group, and varying the level of activity month by month.
Value-Based pricing is comprised of three primary things, says Sean McCabe (The Nuts and Bolts of Value-Based Pricing): your time (as determined by you); your costs (as determined by you (e.g., software, internet, electricity); and value to the client (as determined by the client). This last factor involves determining what kind of profit the client will realize as a result of your work. The client is the one who determines this, says McCabe, and you’ve got to uncover it by asking the right questions.
No matter what you need to do to step up your value-base marketing — from identifying individual customer needs, to respecting their time and privacy, to asking loyal fans for references — do it, and do it consistently. Combine your plans with a winning brand and you’re on your way.