Understanding the Definition of Value will allow you to create Fans instead of Customers !!!

It is important for every business to understand what value that they bring to their customers and their markets.  Before I share with you a FANTASTIC example of what great value is, let’s review first how Webster’s summarizes the definition of value.

Webster’s definition of value:

val·ue

 noun \ˈval-(ˌ)yü\

: the amount of money that something is worth : the price or cost of something

Webster’s might provide us with the definition of value but id doesn’t clarify how value in a marketplace should be measured and how understanding how to create value will drive business growth.

Consider this:

“To be successful in building a business and establishing year over year growth in your business, you might consider that “business value” is delivering MORE value with your products and services than the price or cost that your customers paid you for those products and/or services.”

Your first thought might be, “won’t we go broke if we deliver MORE  than the cost of the product”.   Consider this… when determining the cost of the product you not only have to figure the cost of materials, direct labor, overhead etc. into the cost of the product but also the cost of sales.  The cost of sales can be a very high percentage of the cost of any product or service.  So, if you could create a product where the cost of sales was negligible or zero, then your profitability would increase rather than decrease.  How do you do this?

Simple:  you create so much VALUE that you don’t create a customer,  YOU CREATE A FAN!!!  When you create a FAN (not just a customer) that “raves” about your product and tells other people how much they love your company then your cost of sales will go down (possibly to near zero as more people talk up your product and service).  When your cost of sales goes down, your gross profit and net profit will go up.

This is exactly what happens when you deliver more value that the cost of the product.  You don’t just create a customer you create a FAN.  Check out this post from Facebook that I recently read where a friend of mine “RAVED” about a product:

How to Create a FAN by delivering Value

How to Create a FAN by delivering Value

 

Wendy, a friend of mine, posted this comment about Advanced Auto on Floyd Circle in Dallas, TX.  I don’t know how many friends that she has but they ALL now know that Wendy uses Advanced Auto for all of her five cars and that she is absolutely thrilled with their service.  How many people will use that company because of Wendy’s endorsement…. Enough to pay for the extra service (and the transmission fluid) they provided her (with great service) when she needed it.  If five of Wendy’s friends choose them as their automotive service provider and each person purchases $ 1,000 a year with that company then that business will generate an extra $ 5,000 annually just from Wendy’s recommendation.  If  Advanced Auto has a 20% gross margin then they will make $ 1,000 from Wendy’s friends.  The cost of the labor and the oil was less than $5.  The return on investment from the $5 would then be astronomical.  This is why creating FANS is the only way to grow your business.

Deliver more value than your product or service costs and create an army of FANS who will promote your business and help you establish year over year growth.

Great Quotes by Peter Drucker

 

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