Perceived Value: The Secret to More Sales and Higher Profit
Stop trying to convince prospects you're the "best" and focus on how they see your offer instead.
It’s hard to believe anyone would pay $60,000 for a bottle of water but someone does.
In 2019, a company sold fountain pens for $9,600.
Tiffany & Company crafts a $1,500 book marker that looks like an oversized paper clip.
Who would have thought it’s possible to spend over $71,000 on a bottle of water, a fountain pen, and a bookmark?
But these ordinary products are not so ordinary. They have a special quality about them, something called perceived value, that makes them unique.
Small businesses can tap into this “secret” strategy to charge more for their products and services and attract customers who will pay those higher prices.
You will find out how in this article.
Value Is Subjective
Business owners often say they “provide value” to their customers. But while value is important (in fact, mandatory), it’s more important to focus on what defines it.
Often, business owners identify what they think the value of their product or service is, then try to sell it by convincing prospects to value it for the same reasons.
But this is like swimming against the current. Anytime you expect people to share your perspective, you’re going to face rejection—and a lot of it.
Other business owners let their customers determine the value of their product or service and leverage their reasons to buy as selling points. For example, if people buy it because it’s convenient, the business will use convenience as a reason to buy. This is a better approach because it makes the sales process less challenging.
However, relying on customer demand alone can lead you into the commoditization trap. Being commoditized occurs when another business beats you at your own game. For example, if people choose your product or service because it’s the least expensive option or the most convenient, you stand to lose a lot of sales when another company starts selling it for less or makes it more accessible.
This also puts you in a vulnerable position because you won’t know you have been commoditized until after the damage is done.
So, rather than rely on actual value—which is subjective anyway—generate more demand for your product or service and protect it from being commoditized by focusing on perceived value.
What Is Perceived Value?
Perceived value is a combination of the tangible and intangible worth of a business, product, or service in the mind of an individual customer. The higher the perceived value something has, the more people are willing to pay for it.
Big names like Apple, BMW, and Rolex enjoy the benefits of the premium value and reputation they have created over the years. Though most small businesses are not well-known, they can still elevate their status and profit margins using premium brand strategies.
Before we go any further, let’s examine the fundamentals of a premium brand strategy.
The Ingredients of Perceived Value
Businesses are like human beings. Each one has a unique personality and appearance. And just as people form opinions of one another based on first impressions, your business makes an impression each time customers come into contact with it.
They use your messages and images to get a feel for you, your level of professionalism, and quality of work. By making a great impression, you’re much more likely to attract members of your target audience.
This is why the power of brand identity is so crucial to your success. With it, you can influence prospects to respond positively to your business by intentionally creating an identity they find appealing.
One thing is certain: if you don’t believe in yourself, no one else will either.
Having the mindset that your product or service is worth more than those of your competitors is the first step to greater perceived value.
“Whether you think you can or you think you can’t, you’re right.”Henry Ford
At some point, people will challenge your value proposition. And if you aren’t confident that your offer provides more benefits than others like it, you won’t convince anyone else.
But confidence alone isn’t enough. We must also have a great…
Making our best impression is crucial in almost anything we do and this is especially true in business. Like it or not, the opinions others have of us will directly impact the perceived value we offer.
As I have written before, research shows that humans form their initial impression of an image within 13 milliseconds. This is why the businesses that make the best impression—and make them the fastest—usually win the sale.
Once we have created a fantastic image that communicates high quality, we must then provide…
Many business owners think “doing good work and providing great service” is the way to a prospect’s heart. But these claims, like value itself, are subjective. Instead, we must provide proof beyond a reasonable doubt that our offer is the best solution available.
“Best” is another term that is impossible to quantify. But remember that creating perceived value isn’t about being the best, it’s about being perceived as the best.
Are you beginning to see a pattern?
Analyze your competitors. Make note of the promises they’re making to customers (guarantees of quality, performance, etc.), their sales process, brand imagery, prices, and anything else related to their brand and offers. Look for weaknesses or gaps you can improve or capitalize on.
Put yourself in the customer’s shoes. What makes your product or service better than others like it?
Many business owners haven’t given much thought to what it’s like to be one of their customers. They’re so busy making sales and getting work done that they sometimes forget about the the customer’s journey.
Sit down and map out the entire customer experience from beginning to end. Create a path for people to take, starting from the moment they come into contact with your business until the day they’re referring family and friends, providing steps that move them seamlessly from one stage to the next.
In building perceived value, we never want to misrepresent ourselves or our products and services. Whatever you do, be sure you can deliver on promises and follow through after the purchase. It only takes one bad episode to destroy credibility.
9 Strategies for Creating Perceived Value
1. The benefit must outweigh the cost.
People will only buy something when they believe the benefits received from it are greater than what they will pay.
2. Leverage emotion.
Many premium products and services are not only better on a functional level, they offer greater emotional benefits as well.
Create an experience for your customer that goes beyond the transaction and use. Knowing your customer better than your competitors will help you develop a unique customer experience.
3. Raise prices to create more value.
Ironically, a higher price enhances the value of a product or service. Even though paying more doesn’t always guarantee that actual value is greater, human psychology tell us that if something costs more, it must be worth more.
4. Save your customer time.
Quantify the time saved by linking it to dollar amount.
For example, if someone can save an hour each day using your product and if the time value of each hour is $100, this would create an equivalent savings to the customer of over $36,000 a year. This perspective provides powerful motivation to buy.
5. Form strategic partnerships.
Alliances with companies or business people that have already established a reputation for offering high quality can quickly elevate the status of your business and offers.
6. Reframe cost comparisons.
Using the right comparison reduces the expense and raises the benefit received in the customer’s mind. For example, “the cost of just one cup of coffee a day” has been used in marketing to reframe perceived cost.
Using comparisons will significantly impact how people view your offer. The right comparison will raise value, the wrong one will lower it.
7. Leverage the power of exclusivity.
Creating memberships or treating customers like a VIP is a great way to make people feel special—and they will pay more for it.
8. Reduce risk.
Offering a money-back guarantee can eliminate any hesitancy customers have about buying your product or service.
9. Demonstrate your expertise.
There is a direct correlation between your level of knowledge and how much you can charge. Show the prospect why you’re better at what you do and you will be able to command higher prices for it.
Remember that value itself is subjective. Instead, focus on creating a higher degree of perceived value by having the right mindset, making the best impression, and providing proof beyond a reasonable doubt that your offer is the best solution to your customer’s problem.
Perceived value increases gradually over time. Be sure you can deliver on the promises you make and never cut corners or sacrifice integrity. It takes a long time build a reputation of quality and value but only one bad situation to destroy it.
If you need help, email me personally at [email protected].
Until next time,
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