5 ways to create things people value.
There’s only one way to get people to buy something: Create value for them.
Here’s how to do that…
Value Is Transformation
A person at Point A wants to get to Point B, and your product is the bridge that gets them there.
If your offering takes people where they want to go — if it transforms them — then it’s valuable.
To figure out how to create value, answer these questions:
- Where is your target audience? (Point A)
- Where do they want to go? (Point B)
- What can you create to get them there? (The Bridge)
For example, let’s pretend you’re a guitar teacher.
Your target audience doesn’t know how to play guitar (Point A), but they want to become someone who plays guitar (Point B).
The guitar lessons you sell are the Bridge that gets them there and the value you offer is to transform someone from a non-player to a player.
The same formula can be applied to less obvious transformations as well.
Let’s say you write a newsletter about work-life balance.
Your target audience is people who feel overworked, anxious, and stressed all the time (Point A), but they want to feel the opposite (Point B).
The time management and relaxation tips you share in your newsletter are the Bridge that leads readers from a chaotic life to a balanced one.
Figure Out The Value You Offer
It’s one thing to recognize value is rooted in transformation, but another to deliver it.
If you struggle to identify how you transform your audience, here’s a simple way to think about it:
Transformation happens when you add something (new skills, knowledge, habit, etc.) or subtract something (bad habits, people, problems, etc.) from someone’s life.
If your creation doesn’t do either of those things, it probably isn’t valuable.
If you’re not sure the value you offer, check out the Value Pyramid below and consider which of the 30 things people value you may be able to deliver through your work.
As you define the value you offer, keep in mind it may vary from item to item.
It’s fine to offer multiple types of value — one product to motivate people and another to help them reduce costs for example — but be clear on the intended value for each individual offering and message accordingly.
Use Perception To Establish Value
How you present your proposed value to your audience is as important as the value itself and the first element of that presentation is the role perception plays in establishing value.
To demonstrate that, let’s talk about lobster.
As this infographic reveals, lobster is perceived as a high-end food these days, but it used to be the opposite.
For centuries lobster was primarily eaten by the poor, fed to prisoners, and even cheaper to buy than a can of baked beans.
That changed in the late 19th century — not because lobsters changed, but because the perception of them did.
Railway companies served lobster in dining cars and rebranded it as an exotic dish since it was now being served away from the shores where lobsters were found.
Because the perception of lobster changed, so too did the value consumers associated with it.
This led to overfishing which reduced supply and increased prices — further driving up the perceived value of lobsters until today when it’s viewed largely as a high-end food.
Just like with lobsters, the value of your product can be highly influenced by people’s perception of it so make a concerted effort to influence that perception to your benefit whenever possible.
Use Price To Establish Value
Let’s wash down that lobster story with a little wine.
One of the biggest factors in how a wine tastes has nothing do with grapes or how it was made — it’s what price was slapped on the bottle.
Research shows people consistently say a wine tastes better if they think it’s more expensive.
And they’re not lying.
Brain scans reveal you experience more pleasure while drinking if you believe a wine cost $45 than if it cost $5.
This is because pricing impacts perception and perception impacts value.
Keep this in mind pricing your products.
While you can price yourself out of a market if you go too high, there are distinct advantages to pricing on the higher end of the spectrum.
People may not always get what they pay for, but they think they do.
Use Timing To Establish Value
Price isn’t the only element related to payment that influences perceived value — how and when people pay is also a factor.
An MIT and Carnegie Mellon University study revealed two key findings:
- People feel more pain if they actually see the money leave their hands.
- People feel more pain if they pay after they consume the product.
With this in mind, let’s talk about Uber and taxis.
In a taxi, riders stare at a meter that ticks up — a constant reminder of the pain of payment — and then must pay at the end of the ride.
By comparison, Uber has no visible meter and no visible transaction at the end of the ride.
One of the reasons people value Uber — despite it being more expensive than a taxi — is because payments are handled in a way that makes them feel less painful.
Another example of this comes from research into whether people would rather pay for a vacation with six monthly payments before they take the vacation or six monthly payments after they return.
Sixty percent of people surveyed chose to pay in advance despite that doing so would potentially cost them more (because they could have earned interest on that money had they waited to pay until after the trip).
People prefer to pay up front because it’s painful to have a debt hang over them and to pay for something after they’ve already enjoyed it.
This tendency is worth considering when designing how you charge people for your own product.
The timing of payments and “pain” associated with them will influence your customers’ perception of its value.
The less painful you make it, the higher they’ll value it.
How Gains And Losses Establish Value
When someone decides whether or not to buy from you, they calculate whether what they’ll gain outweighs what they’ll lose in the transaction.
You may think to win them over the gains just need to be bigger than the losses, but that’s not true — they need to be MUCH bigger.
Studies found if you offer people a bet with a 50% chance of winning $100 and a 50% chance of losing $100, they won’t take it.
In order to get people to agree to a bet, the potential gains must be at least twice as high as the losses because we feel losses more significantly than wins.
It’s not enough to make something slightly better than the alternative —it must be significantly better for people to find it valuable.
And the degree of improvement your product offers is only half the battle.
If your creation is an intended replacement for another product or service your audience already uses, that means you’re also asking them to undertake a behavior change.
No matter how simple your offering, they’ll have to learn a new way of doing something, use a different product, or in some way switch up their behavior.
And nobody loves changing their behavior.
The bigger the behavior change required by your product, the bigger the improvements it must deliver for people to consider it valuable enough to buy.
Aim to create something that requires minimal behavior change and offers maximum improvements.
Here’s a chart you can use to figure out how likely your creation is to succeed or fail based on this conceept.
If you’re not able to make something that offers significantly better benefits with minimal behavior change, you may want to aim at a new market instead of competing in an existing one.
For example, Burton snowboards didn’t initially try to convert skiers into snowboarders — it went after non-skiers.
The 5 Keys To Creating Things People Will Value Enough To Buy
This has been a lot to take in, so here’s a quick summary of what you’ve (hopefully) learned:
- The root of value is transformation. Make something that helps people get from where they are to where they want to go.
- Perception establishes value.The story around your product determines its value as much as the product itself.
- Price establishes value.The more expensive something is, the more likely people are to assume it’s valuable.
- Timing establishes value.People feel more pain if they pay after consuming a product than before and if the transaction is more visible.
- Gains vs. Losses establish value.The most valuable products are the ones that deliver maximum improvements with minimal behavior change.
Now that you know how to make something people will value, all you have to do is go out and do it.
Minor detail. 😉