“Everything is worth what its purchaser will pay for it.”
- Publilius Syrus, First Century BC
The observation drawn about consumer behaviour more than 20 centuries ago still stands true. This proves that a product is only as good as its value as perceived by the consumer. As a matter of fact, value in the consumer market goes beyond just the cost and covers the technical, service and social benefits the product provides in exchange for the amount paid to purchase it.
Let’s take a moment to consider what your customers think about and do before buying from you. Perhaps they come across your social media ads or hear about you from a friend or a coworker. They check out your product, compare it to the competitor’s, and after weighing the pros and the cons, make a purchase. When they find value in their purchase, they turn into repeat customers and become your brand advocates. This is the process of a customer or user lifecycle.
With a smooth user lifecycle, a business can maximize revenue for each existing and potential consumer. This starts with an understanding of the key stages of a user’s lifecycle.
This is the point of the first interaction between a business and a consumer. This could come from a social media ad, billboard banner, newspaper article, new product feature announcement or a referral from a friend or coworker.
After it grabs their attention, the user moves to research your product to identify if it’s beneficial to them. The mediums through which this can happen are business websites, social media or phone enquiry.
After gathering insights about your product, most users run a competitor analysis to identify if there’s a better product available in the market. The underlying basis of this comparison is cost, values and benefits. Eighty percent (New Epsilon) of customers claim to make a purchase from a company if it offers personalized experiences.
After a careful and detailed analysis, if they conclude that your product supersedes your competitor’s, they make the decision of making the purchase.
This step involves getting quotes, completing formalities and making the final purchase.
After making the purchase, the consumer expects to find value in the product. Seventy-three percent of consumers (PWC, Future of CX) claim that a good experience is key in influencing their brand loyalty. This value can be viewed in the following terms:
- Monetary: the price they spent on making the purchase
- Benefits: the cost included to gain benefit from the product (this doesn’t involve the acquisition cost)
- Value: what the consumer receives in return for the price paid
The ultimate goal of the user lifecycle is to build brand loyalty. Loyal customers are five times more likely to make a purchase again and four times more likely to refer to a friend. This turns your customers into brand advocates who buy from you and recommend your product to their friends and family. There is only a small percentage of your existing client base that will upgrade to become your loyal customers. It’s hard to know who will turn into a loyal customer, so the best way is to keep trying and to build warm relationships with all of them.
The Value Proposition of your company is the most important factor that determines if your target consumers will make a purchase from you. The value proposition is the promise that the company makes to its users. It entails the benefits that the consumers will derive from the product in exchange for their money and sets you apart from your competitors. Let’s understand the key elements of the value proposition here:
- Solves their problems
More often than not, when individuals set out to make a purchase, they are looking to solve a problem. If your value proposition explicitly explains how your product provides the perfect and real solution for their needs, they’ll be inclined towards it.
- Relates to them emotionally
An effective value proposition is drafted in a language that the consumers can relate to. Using fancy marketing words or complicated jargons confuses your consumers and results in a higher bounce rate. The simpler and more direct your value proposition, the better are the chances of conversion.
- Is personalized
A product that caters to multiple needs attracts a wide variety of users. However, all those users do not share the same goal and are not driven by the same motivation to make the purchase. Therefore, asking them a question or two before they dive right into the many functions of the products helps you build a personalized response for them, avoiding confusion. This personalization makes them feel valued and becomes a part of your value proposition.
When a business helps users understand the value, they derive from making a purchase, it creates an emotional connection between them. This connection helps the user trust the business to solve their problems. A good value proposition in itself proves its advantages over the competitors without having to explicitly state it.