Here is a list of things by which a business can give value to its customers. These can also be business ideas for you. These points are inspired by the book “The Personal MBA“. This book is like a package of the whole MBA in just a single book.
1. Giving Value to Customers on the basis of Product
Create a single tangible item or entity, then sell and deliver it for more than what it cost to make. The more you make and sell the product, the fixed cost keeps on decreasing.
- Providing value in Product form is valuable because Products can be Duplicated
- Products can easily be accessible to everyone
- As I can be seen and touched, So it is trustworthy
- Demands huge investment
- Availability of all the resources is an issue
A Service involves helping or assisting someone in exchange for a fee. To create value via Services, you must be able to provide some type of benefit to the user.
For example- A good example of a Service business is a barbershop. A haircut is not a Product. Other examples are doctors, Lawyers, Content Creators, Digital marketers, and Accountants.
- Less Investment is needed
- Required fewer resources
- Can be Duplicated
- Skilled labour required to provide services
- Not easily trusted
Create a durable asset that can be used by many people, then charge for access. A Shared Resource is a durable asset that can be used by many people. Shared Resources allow you to create the asset once, then charge your customers for its use. For example-
- Gyms and fitness clubs are a classic example of a Shared Resource.
- A game parlor
- museums and amusement parks
- Hotel and Resorts
- Compounding effect(As customer increases, profit increases)
- Networking effect (People usually prefer to come with their friends and family)
- Incur high cost in building asset(machinery)
- Limited people can access the asset at a time(For example- not more than 100 people can access the same Gym at the same time)
Offer a benefit on an ongoing basis, and charge a recurring fee.
The actual benefits provided can be tangible or intangible—the key differences are (a) the expectation of additional value to be provided in the future and (b) that fees will be collected until the Subscription is canceled.
For example-Netflix and Amazon Prime, Internet Subscriptions
- Recurring income
- Must remain updated (if not then people will discontinue your services)
- Not easily trusted
Acquire an asset from a wholesaler, then sell that asset to a retail buyer at a higher price.
Purchase a product as inexpensively as possible, usually in bulk. Keep the product in good condition until sale—damaged goods can’t be sold.
- Bulk profit
- Less skill required
- Inventory management is necessary
Acquire an asset, then allow another person to use that asset for a predefined amount of time in exchange for a fee.
The asset can be pretty much anything: cars, boats, houses, DVDs, books, or anything.
For example- People lease expensive cars so that others use them on their dates with the girlfriend. Another example is people lease property for events.
Just identify the need of the product required in the market and then acquire the best assets.
- The asset can be used multiple times
- Trends changes with fast-changing Environment
- Asset depreciate faster
Market and sell an asset or service you don’t own on behalf of a third party, then collect a percentage of the transaction price as a fee.
It is all about finding customers and selling the products of third-party clients. For example-
(1)Travel agency and Digital Marketing agency.
(2)We can say that Flipkart is also an agency as it does not have its own product. It is just a brand that takes a small commission for marketing and selling the products.
- Focus only on Marketing and Sales
- No asset needed
- Sometimes Brand name impacts Agency business
Take on the risk of some specific bad thing happening to the policyholder in exchange for a predefined series of payments, then the payout claims only when the bad thing actually happens.
One of the most emerging Insurance can be the insurance to digital frauds. “This is a million-dollar idea though”.
- Heavy Demand
- Less competition
- Needs a lot of hard work to frame policies
- suffer a lot of lawsuits
Purchase an ownership stake in a business, then collect a corresponding portion of the profit as a one-time payout or ongoing dividend.
The important thing here is to understand the business model thoroughly. If you are investing in a complex business model then it will be a waste of money to invest.
Examples of Capital are IPO and Mutual Funds.
It is a personal recommendation that everybody should invest in shares.
- Investment can differ according to the financial soundness
- Fewer efforts needed
- Choosing the best business model is the key otherwise there will be losses for sure
Option means proving ‘customer value’ according to the value of money. The best example of an option is Cinemas and Concerts in which there are different price tags based on the place of your seat.
- Additional profit on some specific seats
- Limited seats may dissatisfy some customers
Why top companies give high value to Customers?
There are thousands of tech companies but why people prefer Apple?
Why there is a national holiday on Gandhi Jayanti and not for other heroes?
Why 2,50,000 people gather in Washington DC to listen to the legendary speech of Dr.Martin Luther King (I have a dream)?
Why few people are extremely famous and others are not?
The point is, we make assumptions. We think that the world thinks like what we think. We make assumptions about the world around us based on sometimes incomplete or false information. We make decisions based on what we think we know. But the thing that really makes an impact is “Why”.
The Golden Circle to become Famous
There are a few leaders who choose to inspire rather than manipulate in order to motivate people.
The Golden Circle provides compelling evidence of how much more we can achieve if we remind ourselves to start everything we do by first asking why.
The one habit which is common in all successful and famous people is the habit of reading books.
From business to politics, manipulations run rampant in all forms of sales and marketing. Typical manipulations include: dropping the price; running a promotion; using fear, peer pressure, or aspirational messages; and promising innovation to influence behavior—be it a purchase, a vote, or support.
Good Leaders teach us but great leaders will inspire.
People don’t buy WHAT you do, they buy WHY you do it. Sell the benefits of the product, not the product.
When communicating from the inside out( in the circle from why then how then what), however, the WHY is offered as the reason to buy and the WHATs serve as the tangible proof of that belief.
Also remember, When a WHY goes fuzzy, it becomes much more difficult to maintain the growth, loyalty, and inspiration that helped drive the original success.
Remember, Manipulation is never an option after Inspiration which is generated from your Why.
To become famous a person should always inspire and show loyalty towards their work. We will discuss more on this in the below case study of Apple and how great leaders inspire.
The one thing which in common in all extremely famous public figures and businesses is that they inspire people.
The power of Why to give value to Customers?
Other MP3 companies advertised their product as a “5GB mp3 player”.
Apple advertises iPod as “1,000 songs in your pocket”.
The message itself describes the why of the product. We know the success of the iPods today. Only a single statement changed iPod’s demands drastically.
Apple’s recipe to give Value to Customers?
Observe the order, How Apple actually communicates.
“Everything we do, we believe in challenging the status quo. We believe in thinking differently.
The way we challenge the status quo is by making our products beautifully designed, simple to use, and user-friendly. And we happen to make great computers.”
Apple’s Why is “Status quo” which means changing existing social structure or value. The statement addresses the world why should people start preferring Apple over any other company.
They mention their “what” in the second paragraph.
In practical terms, there is nothing special about Apple. All companies have their own structure. Unlike, a person who does not having always desire to have one.
Let’s consider Macs as an exceptional thing but people are also perfectly comfortable in buying an mp3 player from them, or a cell phone or a DVR.
It’s not WHAT Apple does that distinguishes them. It is WHY they do it. Their products give life to their cause.
Calling it a “lifestyle” is a recognition that people who live a certain way choose to incorporate Apple into their lives. Apple didn’t invent the lifestyle, nor does it sell a lifestyle. It emerges from “Why”.
“Apple not only sells a product now it is selling a lifestyle”, marketing professionals will tell you.
Treat your product/service as a Utility maker.
“Why your product is beneficial to the customer?”
Give people the reasons that “Why” they should buy your products.
The more we treat them as commodities, the more they focus on WHAT and HOW they do it. It’s a vicious cycle.
We already saw the difference between the marketing strategy of the iPod in comparison to other brands.
Those people who share Apple’s WHY believe that Apple’s products are objectively better, and any attempt to convince them otherwise is pointless.
How great leaders inspire in organizations?
Whenever we heard the word leader we assume a person who is dominating with full of energy. A person who fills people with motivation and energy. But great leaders are charismatic, they inspire people.
But, Bill Gates is shy and awkward and, a social misfit. He does not fit the stereotype of the leader of a multibillion-dollar corporation. He is not the most energetic public speaker.
When Bill Gates speaks, however, people listen with bated breath. They hang on him every word. When Gates speaks, he inspires it. Those who hear him take what he says and carry his words with them for weeks, months, or years. Gates doesn’t have energy, but Bill Gates inspires. Energy motivates but charisma inspires.
Motivation is temporary but Inspiration is permanent
Charisma has nothing to do with energy; it comes from a clarity of WHY.
Developing software was merely one of the things Bill Gates did to bring his cause to life.
The whole America remembered the legendary speech of Martin Luther King -“I have a dream”. A slow speaker who inspires millions on that day.
An airline gave Herb Kelleher the perfect outlet to spread his belief in freedom. Putting a man on the moon was one goal.
Apple gave Steve Jobs a way to challenge the status quo and do something big in the world.
Similarly, all the great leaders, presidents, and prime ministers are charismatic leaders.
All the things these charismatic leaders did were the tangible ways they found to bring their WHYs to life. But none of them could have imagined WHAT they would be doing when they were young.
How “WHY” concept works in organizations?
1.The top-level management, representing the WHY, is a leader; in the case of the company, that’s usually the CEO. The CEO is the one who inspires people.
2.The HOW level, typically includes the senior executives or managers who are inspired by the leader’s vision and know HOW to bring it into execution with the help of employees. They train the employees to execute plans.
3.It is at this level that the majority of the employees sit and where all the tangible stuff actually happens.
Employees(What people) follow the instruction of Executives(How people) who follow the vision of Leaders(Why people).