When you run a business, your job is to produce and sell value. It is both as simple and as complicated as that. When I see businesses getting value wrong, I have a physical reaction to it – it’s like watching a starving person eat cardboard. So that’s what we’re going to focus on today: Getting value right. Because if you can do that, you can make money.
Let’s start with a few examples.
Getting Value Wrong
I was recently in a family-owned jewelry store, consulting with them about how to make improvements to their business. Their traffic is down to almost nothing, sales have declined for five years in a row, and the staff morale is abysmal. When I asked the buyer and store owner to explain their merchandising strategy to me, they focused entirely on price. Or, specifically, low prices.
“The big boxes and online retailers are kicking our behinds on jewelry prices,” they said. "We’ve done everything we can do to lower our prices, but we just can’t compete at that level. They’re obviously buying a lot better than us.”
Of course, when you drop prices and your traffic drops, the only predictable result is that your revenue goes down. Even if your traffic stays the same, if you drop prices and do nothing to increase the number of purchases, your revenue goes down.
In this store, the merchandise looked very similar to what the merchandise would have looked like 15, 20, even 30 years ago. Lots of classics, lots of bread-and-butter. Nothing new, nothing exciting.
This is a classic example of getting value wrong. The assumption this store owner made was that the only “value” his buyers wanted was low prices. He didn’t ask the customers. He was reluctant to invest in new products that are more exciting, fresher, and unlike what is offered at the discount jewelry outlets. Low prices aren’t the only value customers want, and had he discovered a different value proposition to offer, he could actually grow his business. So we’ll work on that now.
Getting Value Right
One of my very first jobs was at a major advertising agency, and I’m pretty sure this was the experience that taught me about value. I was in a meeting with my project team discussing an unhappy customer. The project manager was leading the meeting, and our VP was attending. The project manager kept talking about how to “showcase the numbers.” He spoke of using the most positive data, reflecting the highest possible viewer statistics, and painting the rosiest picture we could to help the customer see how much impact we were having.
The VP – a guy who never spoke very much – finally asked, “What does this customer really want?”
The project manager said, “Great service and great advertising!”
“No,” the VP said. “He wants sales. And all the inflated statistics in the world won’t make sales happen. What we need to do is give him a campaign that drives sales. Then he will be happy.”
It’s easy to get lost in the details of our businesses, but value comes down to a few simple things:
Know what your customers actually want and need from you.
Give it to them – in the right way and at the right (which isn’t necessarily low) price.
Of course, these two concepts are simple, but their execution is not. What people want and how to deliver it can be very nuanced, and it is ever-changing. But if you keep these two points top-of-mind at all times, you will find they guide your work in new – and possibly unexpected – ways.
Andrea Hill is a business owner and writer. She owns Hill Management Group, LLC, with the brands StrategyWerx and SupportWerx. StrategyWerx is Andrea’s platform for serving small business owners. Learn more at werxblog.com.
This article is an online extra for INSTORE Online.
JEWELER SUCCESS STORIES
A Worry-Free Way to Close Shop
Ron Pierro, owner of Pierro's Jewelers in Brandenton, Florida, chose Wilkerson to run his going out of business sale. From marketing to on-site sale management, Wilkerson did it all--giving Ron the kind of closure that only comes from trusting the best. Wilkerson.
Latest Know How Stories
- How Far are Jewelers Prepared to Go to Save a Sale? Our Brain Squad Answers
- Is a Big Brand Store-in-Store a Fit for You? See What Other Jewelers Say
- After 2 Clients Divorce, an Owner Must Decide Who Owns the Store Credit
- This Simple Thing is Guaranteed to Make a Customer Feel Good
- Have a Young Fan Who Loves Your Store? Here's How to Make Her an Ambassador