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Focus On Creating Value
Iniobong Uyah & Alex Christidis
November 29, 2024
For entrepreneurs, the core mission is simple: create value. It’s the reason customers choose to patronize a business. When a business stops delivering value, customers will inevitably look elsewhere. A truly customer-focused business prioritizes providing value and fostering loyalty to maintain a competitive edge.
But what exactly is value, and how can entrepreneurs measure and create it for their customers? Let’s dive in.
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What is Value?
Value is the benefit customers receive in exchange for the price they pay for a product or service. In a world full of alternatives, entrepreneurs must ensure their business stands out as the preferred choice. Amazon’s founder, Jeff Bezos, explains it best when he emphasizes the importance of obsessing over the customer experience:
If there’s one thing Amazon is about, it’s obsessive attention to the customer experience end-to-end… It doesn’t matter to me whether we’re a pure Internet play. What matters to me is whether we provide the best customer service… Our investors should be investing in a company that obsesses over customer experience. In the long term, there’s never any misalignment between customer interests and shareholder interests.
Amazon has dominated its competitors and reshaped the e-commerce landscape by building a strategy centered on delivering value. Tesla offers another example of customer-centric value creation. Although its approach differs from Amazon’s, the results are undeniable: Tesla has become the world’s leading electric vehicle company. These examples highlight that value creation strategies depend on the industry—but the goal remains the same. Before diving into how businesses like Amazon and Tesla create value, let’s look at how entrepreneurs can measure it.
Tesla has the most loyal customers of any car company with an overall satisfaction rating of 90%. A staggering 80% of customers buy or lease another Tesla for their next car. Some customers were even willing to wait years to get their Model 3s
How to Measure the Value Your Business Creates
Creating value is just the beginning. Entrepreneurs must also track and measure the impact of their efforts. Here are two key ways to measure value:
1. Customer Retention Rate
Customer retention rate is a simple but effective metric. It represents the percentage of customers who continue using a company’s product or service over a period of time. For example, if you start the year with 100 customers and end with 80 still loyal to your business, your retention rate is 80%. A company that’s consistently creating value will generally see an increase in customer retention over time.
2. Price and Value Perception
For most products and services, the price customers are willing to pay reflects the value they perceive. If customers feel the price is not worth the value, they’ll seek alternatives. This makes pricing a powerful tool for assessing value. If you’re considering raising your prices, ensure you’re also increasing the value you provide.
How to Create More Value for Your Customers
Delivering value isn’t a one-time effort—it’s an ongoing process that requires adaptability and dedication. Here are four ways to create more value for your customers:
1. Be Flexible and Adapt to Changing Needs
Stay attuned to your customers’ evolving expectations and be willing to adjust your offerings to meet their needs.
2. Don’t Just Collect Feedback—Act on It
Asking for customer feedback is great, but implementing it is what truly makes an impact. Show your customers that their opinions shape your business decisions.
3. Go the Extra Mile
Small, thoughtful gestures can make a big difference. Providing unexpected perks or exceeding expectations can leave lasting impressions.
4. Be Reliable and Trustworthy
Consistency builds trust. Deliver on your promises, and your customers will return.
Creating value is the foundation of any successful business. By focusing on meeting and exceeding customer expectations, entrepreneurs can build loyalty and trust and stand out in competitive markets.
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Until next time, Best Regards.
Alex