The other day I was wandering around Darling Harbour, Sydney and I witnessed something fascinating. I saw potatoes being sold at $7.00 each. You must be thinking that these were some sort of imported, hybrid gourmet potato. They may have been, it was hard to tell because they were covered in batter, chicken salt and paprika.
Introducing the Potato Tornado
It was a severe case of value adding where a humble potato was turned into to an upmarket and glamourous show day take-away food item. Adults and children alike were queuing consistently throughout the day to spend $7.00 for one potato prepared creatively on a long stick. Albeit a very gourmet looking, value added potato drowned in oil and batter and sprinkled with a choice chicken salt or paprika.
Although the Tornado was not for the cholesterol challenged it certainly appeared to be ‘delighting’ customers young and old on the day.
Industry level Value Adding
At a potato industry level value adding starts by taking a raw potato from the ground which is worth a few cents. The value adding process includes numerous steps from harvesting, washing, storing, transport through to processing. Quite often it is the latter stages of the value adding process that add the greatest value to the end customer and therefore result in the greatest change is product price. Latter stages such as plucking a washed, fresh potato from the supermarket 5KG bag at an outdoor event and converting it into a $7.00 ‘Tornado’.
How does Value Adding work for small business?
For small business the opportunities for value adding are a little different. Value adding is about understanding your customer’s needs and important issues. Identifying needs or issues that are important to them where you can make a difference. The needs or issues are not necessarily the most important overall. They may not be over-arching critical issues. They are however, needs or issues that are valued by the customer.
Two great options to value add include:
- Taking an existing product or service that is perhaps fairly basic and upgrading it and converting it into a more sophisticated product that offers more or simply different features and benefits for the customer
- ‘Adding Value’ to an existing product or service and adding something extra to it so that it offers more value to the customer often in the form of a pleasant surprise post purchase
Both of the above options can be implemented with products and services.
You could argue that this second option ‘Adding Value’ is slightly different to the concept that applies to the industry level concept of taking a potato and turning it into a Tornado. This concept of Adding Value is a much smaller step for business operators and is something that many business operators can turn their minds to immediately. Simple adding value is also often without the sometimes long term timelines associated with value adding in the Potato-to-Tornado example.
Sadly, not all business operators have the opportunity, resources and ability to value add in the same way as the Potato-to-Tornado example. However, almost all business operators have the ability to add value to key product or service lines.
Where do opportunities to Value Add lie?
Quite often opportunities to value add lie within our core areas of expertise or areas of speciality. Great value adding opportunities are frequently found within the resources or activities that are part of our everyday operations.
Often value adding is about sharing at no cost to our customers resources or skills that we consider to be routine and every day
Examples of business operators adding value to their existing products and services include:
- Service providers sharing some of their expertise via blogs, newsletters and free public speaking engagements
- Coffee shops and restaurants slipping a small gourmet chocolate on the saucer next to the coffee cup when delivering the customer’s Skinny latte
- Real-estate agents and car dealerships delivering flowers and gift hampers at the conclusion of a sale
- Food producers providing free recipes, cooking tips, allergy or added nutritional information that is above the mandatory
- Builders, Designers, Architects, Conveyancers providing advice to clients that is over and above what they have been specifically engaged to complete
7 Steps to Optimising your Adding Value Activities
The following represent 7 steps to optimising your adding value activities:
1. Review your Marketing Strategy
Consider your approach to adding value in the context of your overall marketing strategy and marketing implementation schedules. Include in this review your selected Primary and Secondary Target Markets and your Desired Brand Positioning.
2. Review your Customer Needs
Review your understanding of your customer needs and how you can satisfy them to a higher level. In other words consider how you can further ‘delight’ your customers. Consider implementing some fact finding or research to gain a deeper insight regarding what is important to your customers.
3. Determine how to Help
This of course, is the key decision. Determining how to help is about weighing up what is important to your customers with what you can offer to add value that is sustainable for your business. Sometimes the best added value initiatives are the small things like the small chocolate to go with the coffee. Other times it requires a more significant investment such as providing services at no charge in the form of a free presentation or training session for your customers.
4. Tell your Customers
There is no point in adding value if it is not clear to your customers what they have received. So make sure that your approach to adding value is not so discreet that the customer does not realise the effort you have made. Better still, find a way to promote the added value benefits that you are offering in a strategic way.
5. Monitor and Control
You need to monitor and control the outcomes of your added value activities to ensure that they are having the desired effect. You also need to ensure that they are not resulting in unexpected cost increases.
Delighting Customers over Time
Obviously our rationale for adding value is to better serve our customers.
Adding value is a way of ‘delighting’ our customers and hopefully forging stronger, long term relationships.
However, over time the marketplace and our customer needs change and evolve. So too must our approach to adding value. Your approach to adding value is one that needs to be reviewed on a regular basis so that you keep ‘delighting’ your customers.