Before a business can provide more value to its customers, it must have a clear understanding of value.
What is Value?
Value can be defined as the importance, worth or benefit of something to someone.
The ‘value’ of something is not a fixed commodity, for example, a barrel of water costs more than a barrel oil in the middle east.
The importance of water and the life-giving benefits it provides places it’s ‘worth’ above oil in a region where oil is abundant and freshwater is not.
The Three Vectors of Value
So the 3 vectors of value can be classified as:
- Worth (Cost)
Consider your parts supplier, what do you value most about their service?
Is it the price of the products, or the number of deliveries per day?
If you had to choose between two suppliers what would add more value to your business?
Price or the correct part supplied?
So ‘value’ can be subjective if the job has no time pressure and the extra profit was worthwhile then the cost might sway your decision.
But if the job could tie up a ramp for a day or two then getting the correct part might be of greater benefit.
If this is true when you are a customer (as is the case when dealing with your parts suppliers) then it must also be true for your customers.
However, it is not easy to identify which vector of value is most important to your customers, because it changes all the time.
How do your customers perceive ‘value’ in the services you provide?
Here are some examples for each of the value vectors.
Having a roadworthy and reliable vehicle is of great importance to some customers, to others, it is simply a legal requirement, they are required by law to have an MOT certificate.
Customers who recognise the ‘value’ of quality parts and the increased longevity offered by regular servicing above and beyond the minimum requirements of the service schedule will appreciate it may take a little longer to do the job right, and will not focus solely on the cost.
Offering different levels of servicing caters for the different importance placed on servicing and maintenance by your customers. I have seen this done a number of different ways, but Bronze, Silver and Gold standards offer customers an obvious choice in this regard.
There is only room for one ‘cheapest garage’ in any town, so competing on price is never a great basis for adding value. There is always someone willing to do the job cheaper than you so leave them to it.
Worth, in this case, may not the cost, but the avoidance of unnecessary expenditure. Using air conditioning as an example (it has been hot recently) just topping up the refrigerant in the system may cost less, but a full air con service that reveals a small leak which once repaired ensures the system continues working effectively is a far better option. It may look more expensive but it is cheaper in the long run.
Sometimes the benefits of your offering compared to others is clear cut, you offer a courtesy car, for example, meaning the customer is still able to drive around while the work is carried out.
However, the benefit isn’t always clear to the customer.
You use approved oils for each and every application, not just the closest match out of the two barrels at the back of the shop. You only use OEM or equivalent filters and have the ability to store electronic service records. These benefits are not so obvious to your customers.
Is Your Value Obvious?
Ask yourself, is your ‘value’ obvious to your customers?
dentify areas of hidden value and ensure you make customers aware of the value you add to the services which you provide.
It could be a simple report with the results of the air conditioning service.
Initial vent temperatures, the quantity of gas recovered, condition of the drive belt etc.
Or leaving an air freshener in car, but whatever you choose should make it obvious that you added value.
How do you communicate your ‘value’ to your potential and existing customers?
This is not easy and is probably why so few businesses do it. Those that do are normally focusing on price. But what of the other value vectors?
Offering a guarantee is one way to communicate ‘value’ without trying to compete on price, it suggests it is important for the garage to do the job properly, the extra cost is worth it because the work is guaranteed, and the benefits are obvious to the customer. Even if the guarantee is only what any customer would expect or is legally entitled too, the fact you make a point of offering one re-enforces the concept and adds value.
Provide More Value
The easiest way to provide more value is to consider your customer’s needs and offer services that meet those needs.
Remember the 3 vectors, value can be importance, worth or benefit to the customer.
For example, offering a collection and drop off service for customers, this could be very important to those customers who are shielding. Beneficial to shift workers, and worth the extra cost to avoid paying for a taxi or bus.