Tuesday, April 7, 2009

Value The New Must-Have Commodity


When discussing the financial crisis over fajitas a few months ago my father told me something profound, the main reason these mortgage backed securities failed can directly be attributed to the value of them, which was obviously zero. Not value in monetary terms, this group of stocks is worth $29.99 as of Tuesday, not that type of value, but value as in what does this thing do for the person buying it? What purpose does it serve? What value does it create? In the financial meltdown value was absent from the proposition, only money, and blind greed existed when it came to analyzing these career killing assets.

Want to sell something on the internet, it must offer true value to all parties involved. If you aren’t getting yours, it won’t be sustainable. Conversely, if the customer isn’t getting the absolute best product or service for the most reasonable price they will inevitably keep looking for a better deal. Some things trump this theory; a celebrity for example can sell a t-shirt with their name on it for more than you could. A politician with little to no writing ability is much more likely to land a book deal than most of us citizens. But for the most part, if it’s average Joe versus average Joe, the Joe that offers more value wins.

Value is a somewhat ambiguous term, so let’s take a minute to define it.

Value is what someone gets for their money, value is only increased when more of what a customer wants is added at no additional cost to the customer.

Buy a bottle of Gatorade at most gas station convenience stores and that’s all you get. Buy it at Jimmy’s and get a free snickers bar with your purchase. If you were driving, Jimmy’s on the left, a typical convenience store to the right, which place are you going to buy your thirst quencher from?

The same theory can be applied to internet business, value counts.

You don’t have to be the cheapest of the lot, that often comes with a far less flattering stigma in its own right, but you surely want to offer the most value of the bunch.

When building a website, what is it that you want to sell? Take whatever it is, think of everything else people could use when purchasing this thing, and add it on for free. Yes, free.


Just one of the millions of online business examples would be Zappos, and the use of free overnight shipping. Other merchants were already doing free shipping, Zappos thought about what a shoe buying customer on the internet might want besides just free shipping, and poof, free overnight shipping was born on their website. Further, if you want to return the shoes for any reason, that’s free too. I promise you more than a few people shop the site for these reasons alone, I know I do. I often don’t buy shoes until I need them urgently, as in, well, overnight.

As much as you might see adding on extras for free as profit lost, or a major sacrifice, it often times is the difference between someone buying from you, instead of the other average Joe.

A lesson I learned when I had a not-so-profitable retail business is that your customers do not associate your feelings with your business. They don’t know how much you spent building the website, how many people you had to beg for favors to get it up, how much you have riding on the success of the business, and so on. All they know is they need whatever you’re selling and if you don’t have the most value focused offer, they’ll go with the Joe that does. Would you not do the same if the tables were reversed?

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