In this episode: Value is in the eye of the beholder. Jon Peyton explains how customers decide whether something is worth the price, and why speed, time saved and expertise so often decide it. He shows how the same thinking applies to employees and vendors, and how his own planning firm built its services around what clients said they valued most.
Key insights
- Customers pay more when they believe they’ll get better, faster or bigger results.
- Time is often the deciding factor. People delegate when someone else can do it better at a lower total cost, including the value of their own time.
- Value exchange applies to every audience: customers, employees and vendors.
- People rarely trade down. Once they’ve experienced a higher level of value, they hold on to it.
- If you stop listening to your customers, competitors will offer better value and take them.
Episode timeline
- 0:00 What is value, really?
- 0:48 Value is in the eye of the beholder
- 3:51 Why people rarely trade down
- 5:06 Why people pay an expert to do their taxes
- 6:17 Valuing your own time
- 9:17 Value exchange with employees and vendors
- 11:14 How Jon’s planning firm defined its services
- 11:50 Depth of planning at big firms versus a specialized firm
- 14:39 Content that lets clients see the value first
- 15:56 The intangible benefits clients buy
- 21:31 When a business stops listening
The episode in brief
Value is in the eye of the beholder. Would you pay $10 for a beer you could get for $5 down the street? Sometimes you would, if you believe the $10 beer offers more. Time, place and circumstance all shape that judgment. The entrepreneur’s challenge is helping customers see enough value to part with their money, especially at a higher price.
People rarely trade down. Some Honda buyers eventually move up to Acura as their means and expectations grow. It’s rare to see someone go the other way, and if their situation forces it, they’ll make the Acura last as long as possible. Once people experience a higher level of value, they hold on to it.
What people really pay for. Customers usually pay more for better, faster or bigger results, and they’ll delegate work that someone else can do better at a lower total cost. Taxes are Jon’s example. Plenty of people could do their own with software. Many prefer to pay a preparer, an enrolled agent or an accountant. Jon could do his own, but it would take hours he’d rather spend on his family or his businesses, so he hires an expert. That’s need meeting want, and time valued above cost.
Value exchange applies to everyone. Employees value feeling heard, being part of something and building their future. Vendors may value predictable revenue. Offer a 12-month contract instead of month-to-month, and a vendor may happily trade a discount for that security.
How Jon’s planning firm applied it. His specialized planning firm offers four types of planning: executive financial planning, divorce planning, special needs planning and exit planning. At big firms, Jon had seen planning limited to a few hours a year. His firm invests at least 100 hours a year in each client’s planning, built around the deeper, ongoing work that entrepreneurs and executives said they needed. It published case studies, articles, checklists and masterclasses so people could understand the value before committing.
Sell the intangible benefits. What clients ultimately buy is time back with family, peace of mind that their affairs are in order, and confidence about decisions such as a sale offer. Understand which of those matters most to your customer, and show how you deliver it.
Keep listening or lose them. When a restaurant gets the value exchange wrong, Jon doesn’t go back. Businesses that stop listening to customers and competitors fail to adapt, and someone else steps in with better value.
Key action items
- Ask customers what they value most. Speed, results, time saved or peace of mind? Use their answers in how you describe your offer.
- Price your own time. Put an hourly value on your time and list tasks you do that someone else could do for less.
- Look for a value exchange with a vendor or employee. Find one place where offering security, recognition or a longer commitment could benefit both sides.
- Show value before the sale. Create one piece of content, such as a checklist, case example or guide, that lets prospects see how you work before they commit.
Listen next: Episode 13: The Entrepreneurship Plan: Create Your Roadmap
Value Creation Consultancy™ has since merged into Founder’s Accounting™.
This episode is educational and isn’t legal, tax or financial advice. Speak with your own attorney and advisers about your situation.